THE COMPANY STORE AND THE LITERALLY CAPTIVE MARKET:
CONSUMER LAW IN PRISONS AND JAILS
Stephen Raher
Table of Contents
I.
II.
A.
B.
C.
D.

III.
A.
B.
C.
D.
E.
IV.
A.

B.

C.

D.
V.
A.

B.

VI.

BACKGROUND .................................................................................................... 2
SURVEYING THE LANDSCAPE OF PRISON RETAILING ......................................... 4
End Users ...................................................................................................... 5
Payers ........................................................................................................... 6
Facilities ....................................................................................................... 7
Vendors......................................................................................................... 9
1.
Telecommunications .............................................................................. 10
2.
Commissary ........................................................................................... 11
3.
Money Transmitters, Correctional Banking, and Release Cards ........... 12
4.
Tablets: The New Frontier ..................................................................... 15
UNFAIR INDUSTRY PRACTICES ......................................................................... 17
Masquerading as Cream: Inflated Prices and Inefficient Payment Systems .. 18
What Law Applies? .................................................................................... 24
Terms of Service: Carrying a Bad Joke Too Far ........................................ 25
Advertising, Consumer Perceptions, and Behavioral Economics ............... 27
Data Insecurity ............................................................................................ 31
POTENTIAL SOURCES OF PROTECTION.............................................................. 34
Telecommunications Law ........................................................................... 35
1.
Technology Has Outpaced the Regulatory Framework ......................... 39
2.
The New Cross-Subsidies ...................................................................... 41
3.
Advocacy and Activism ......................................................................... 43
Financial Services Law, Money Transmitters, and Prepaid Accounts ........ 46
1.
Categorizing Prepayments ..................................................................... 47
2.
If You’re Dealing with Cash, What Financial Services Laws Apply? ..... 49
3.
Legal Issues Related to Release Cards ................................................... 51
UDAP Statutes ............................................................................................ 53
1.
Prices...................................................................................................... 54
2.
Terms and Conditions ............................................................................ 55
3.
Sales of Goods ....................................................................................... 57
Antitrust ...................................................................................................... 59
POLICY RECOMMENDATIONS ........................................................................... 61
State and Local Governments ..................................................................... 61
1.
Reimagine Procurement Practices.......................................................... 61
2.
Foster Competition................................................................................. 63
3.
Conduct Rulemaking Proceedings to Protect Consumers ...................... 64
4.
Provide Protection for Trust Account Balances ..................................... 64
5.
Develop Independent ADR Systems ...................................................... 65
Federal ........................................................................................................ 67
1.
CFPB Regulation of Correctional Banking ............................................ 67
2.
Congressional Action ............................................................................. 68
3.
Wright Petition, Post-Remand ............................................................... 68
CONCLUSION .................................................................................................... 69

Abstract: The growth of public expense associated with mass incarceration has
led many carceral systems to push certain costs onto the people who are under
correctional supervision. In the case of prisons and jails, this frequently takes
the form of charges and fees associated with telecommunications, food, basic
supplies, and access to information. Operation of these fee-based businesses
(referred to here as “prison retailing”) is typically outsourced to a private

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firm. In recent years, the dominant prison retail companies have been
consolidated into a handful of companies, mostly owned by private equity firms.
This paper explores the practices of prison retailers, with a focus on consumerlaw implications. After an overview of the prison-retail industry and a detailed
discussion of unfair practices, the paper looks at some potential legal
protections that may apply under current law. These protections, however,
prove to be scattered and often illusory due to mandatory arbitration
provisions and prohibitions on class adjudication. The paper therefore
concludes with recommendations on a variety of steps that state, local, and
federal governments can take to address the problems inherent in current
business models.
Acronyms
ACH ........................................... Automated clearinghouse
ADR ........................................... alternative dispute resolution
CFBP .......................................... Consumer Financial Protection Bureau
EFTA.......................................... Electronic Fund Transfer Act
FCC ............................................ Federal Communications Commission
FTC ............................................ Federal Trade Commission
GLBA ......................................... Gramm-Leach-Bliley Act
GTL ............................................ Global Tel*Link
ICS ............................................. inmate calling service
MACCS...................................... merchant authorized consumer cash substitute
UCC ........................................... Uniform Commercial Code
UDAAP ...................................... unfair, deceptive, or abusive acts or practices
UDAP ......................................... unfair or deceptive acts or practices
VoIP ........................................... Voice-over internet protocol
I.

Background

Since the 1970s, the number of people incarcerated in U.S. prisons and
jails has skyrocketed. With approximately 2.3 million adults currently held in
correctional facilities, 1 mass incarceration is no longer a fringe issue—it
impacts families in every community in the nation. Numerous constituencies,
from prison guards to utility companies to construction firms, profit from the
current system of incarceration; 2 however, literature on profit-seeking in the
carceral economy has disproportionately focused on companies that construct
and manage correctional facilities. 3 This preoccupation with facility operators

1

Peter Wagner & Wendy Sawyer, Mass Incarceration: The Whole Pie 2018 (Prison Policy
Initiative 2018), available at https://www.prisonpolicy.org/reports/pie2018.html.
2 See generally, Marie Gottschalk, Caught: The Prison State and the Lockdown of American
Politics ch. 3 (2015).
3 This focus on for-profit facility operators (such as CoreCivic (f.k.a. Corrections Corporation of
America) and the Geo Group (f.k.a Wackenhut Corrections Corp.) has been rightly criticized for
over-estimating the political strength of the private prison lobby (in terms of influencing
substantive criminal justice policy), while ignoring the dominant position of publicly-run
facilities, both in terms of fiscal outlays and number of people held. See Ruth Wilson Gilmore,
“The Worrying State of the Anti-Prison Movement,” Social Justice Blog (Feb. 23, 2015),
http://www.socialjusticejournal.org/the-worrying-state-of-the-anti-prison-movement/ (“The long-

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ignores the explosion of smaller, privately held firms—such as
telecommunications providers, technology companies, commissary operators,
and money transmitters—that have sprung up to monetize the basic every-day
aspects of life in prisons and jails. These companies, which I refer to as “prison
retailers,” extract money from incarcerated people and their families in
numerous transactions. Despite the small dollar-amount of most purchases,
prison-retail firms can command aggregate revenue on par with private prison
operators. 4
The rise of prison retailing is a predictable result of the ways in which
the American carceral state has transformed over time. Penitentiaries began as
nominally charitable institutions designed to isolate people and put them to
work in preparation for an eventual return to the labor force. 5 Prison-based
labor was meant either to support the internal needs of a self-sufficient
institution or to earn profits on the open market for the financial support of the
institution. While the idea of the self-sustaining penitentiary was always
partially mythological, today’s correctional facilities have abandoned any
pretense of paternalistic self-sufficiency, opting instead for a model of extreme
austerity, supplemented by the sale of goods and services to those who can
afford it.
Prisons represent an expansive use of state power, driven by
policymakers of both major political parties who generally claim to support
limited government. Thus, the contemporary prison embodies the notion of the
“antistate state,” developed by geographer Ruth Wilson Gilmore, 6 as well as the
concept of “neoliberal penality” espoused by legal theorist Bernard Harcourt. 7
But regardless of the theoretical framework one uses, the dilemma is the same:
the size and extent of the nation’s carceral infrastructure has grown
dramatically at the same time policymakers have delegitimized policies and
institutions that were designed to enhance the health and welfare of
disadvantaged people. As a result, the current mindset in many carceral
standing campaign against private prisons is based on the fictitious claim that revenues raked in
from outsourced contracts explain the origin and growth of mass incarceration.”).
4 Peter Wagner & Bernadette Rabuy, Following the Money of Mass Incarceration (Prison Policy
Initiative 2017), https://www.prisonpolicy.org/reports/money.html (“Private companies that
supply goods to the prison commissary or provide telephone service for correctional facilities
bring in almost as much money ($2.9 billion) as governments pay private companies ($3.9
billion) to operate private prisons.”).
5 David J. Rothman, “Perfecting the Prison: United States 1789-1865,” in The Oxford History of
the Prison: The Practice of Punishment in Western Society 100, 105-107 (Norval Morris & David
J. Rothman, eds. 1995).
6 Ruth Wilson Gilmore, Golden Gulag: Prisons, Surplus, Crisis, and Opposition in Globalizing
California 245 (2007) (“The antistate state depends on ideological and rhetorical dismissal of any
agency or capacity that ‘government’ might use to guarantee social well-being.”); see also Ruth
Wilson Gilmore “Organized Abandonment and Organized Violence: Devolution and the Police”
(U. of Calif. Santa Cruz, Nov. 9, 2015), at 14:45, available at https://vimeo.com/146450686
(defining the antistate state as “The institutional result of rhetorical, but not real, state shrinkage,
with its attendant devolution…of obligations to more local/state levels, or to non-state
agencies.”).
7 Bernard E. Harcourt, The Illusion of Free Markets 41 (2011) (“The punitive society we now
live in has been made possible by . . . [the] belief that there is a categorical difference between
the free market, where intervention is inappropriate, and the penal sphere, where it is necessary
and legitimate.”).

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systems is to shift many costs of basic subsistence onto incarcerated people.
Prison retailing also reflects changes in the ways that incarcerated
people relate to the carceral state. While American prisons historically strove
to isolate people from the outside world and harness their labor for the benefit
of the institution, in the twentieth century incarcerated populations no longer
represent a potentially valuable source of labor, but rather are surplus labor that
must be housed at the state’s expense. 8 Seen through this lens, prison retailing
is properly understood as a mechanism by which a state liability (i.e.,
incarcerated people) becomes a potential source of revenue for both public
agencies and private firms. 9 Prison retailing also deviates from the neoliberal
ideal of the free market, in that incarcerated people are left to purchase essential
goods and services in a market that is neither free nor competitive. This
seeming paradox is neither surprising nor unique, given that most American
“free markets” are in actuality highly structured spaces that are governed by
“intricate rules . . . all of which distribute wealth.” 10
This paper begins with an exploration of the types of goods and
services sold in prisons, and the companies that dominate the market. A
discussion of specific unfair practices follows, with a subsequent analysis of
existing laws that may provide relief to consumers. The paper concludes with
policy recommendations for addressing and ending the unfair business practices
that are prevalent today. Readers should bear in mind that prison retailing is a
close cousin to other mechanisms of neoliberal penality that are beyond the
scope of this paper, such as the proliferation of fees and fines associated with
judicial proceedings, bail, probation, or supervised release, 11 charging
incarcerated people for medical care,12 or making people pay for the basic costs
of their own incarceration (so-called “pay to stay” laws). 13
II.

Surveying the Landscape of Prison Retailing

The prison retail industry has grown in an unplanned, idiosyncratic
manner. What started as a niche industry occupied by numerous narrowlyfocused companies is now dominated by a handful of conglomerates owned by
private equity firms. To better understand the players and products in this
economic sector, it is helpful to analyze the four essential components that
define any prison retail transaction: the end user, the payer, the facility, and the
vendor.
8

See generally, Gilmore, Golden Gulag, supra note 6 at 70-78.
See Lisa Guenther, Prison Beds and Compensated Man-Days: The Spatio-Temporal Order of
Carceral Neoliberalism, Social Justice, issue 148 (Spring 2017), 31, 42 (The logic of neoliberal
penality “does not primarily exploit the labor power of the prisoner, nor does it seek to discipline
the subject or redeem their soul; rather, it targets criminalized populations for their potential to be
warehoused.”).
10 Harcourt, supra note 7 at 185.
11 Neil L. Sobol, Fighting Fines & Fees: Borrowing from Consumer Law to Combat Criminal
Justice Debt Abuses, 88 U. Colo. L. Rev. 841 (2017).
12 Wendy Sawyer, “The steep cost of medical co-pays in prison puts health at risk,” Prison Policy
Initiative Blog (Apr. 19, 2017), https://www.prisonpolicy.org/blog/2017/04/19/copays/.
13 Lauren-Brooke Eisen, “Charging Inmates Perpetuates Mass Incarceration,” Brennan Center for
Justice (May 2015), available at https://www.brennancenter.org/publication/charging-inmatesperpetuates-mass-incarceration.
9

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A. End Users
Either incarcerated people or their friends and family can be end users,
depending on the product or service being sold. Goods sold through a
commissary are exclusively sold for use by people inside correctional facilities;
whereas telecommunications services are sold for the benefit of the two parties
communicating. Financial products can be targeted solely at an incarcerated
person (release cards), or can be used to facilitate a two-party transaction
(money transfers).
The “customer base” of end users is notable for several prominent
demographic trends. People in prisons and jails are disproportionately likely to
have low pre-incarceration incomes, 14 low rates of formal education, 15 high
rates of unemployment, 16 and high prevalence of mental illness. 17 One might
expect policymakers to be receptive to the idea of enhanced protections for a
group of consumers with such pronounced disadvantages; however, this is not
the case when it comes to incarcerated people. Although families and friends
of the incarcerated have made substantial progress in the last two decades,
policy debates on the rights of the incarcerated are still dominated by
stereotypes and prejudices that stack the deck against the establishment of new
rights and safeguards. For example, introduction of computer-tablet programs
in prison should raise questions about unfair pricing of digital products; 18 but a
common response from legislators is to express “disgust” that people are
“receiving gifts that will make their time served easier.” 19
In some ways, the political mischaracterization of prison retailing
resembles a new manifestation of the zero-sum fallacy described by
criminologist Frank Zimring: a belief that “[a]nything that hurts offenders by
definition helps victims.” 20 Not only is the zero-sum construct logically faulty,
but it in the case of prison retailing, it is factually ill-conceived, since it is the
14

Bernadette Rabuy & Daniel Kopf, Prisons of Poverty: Uncovering the Pre-Incarceration
Incomes of the Imprisoned (Jul. 2015), https://www.prisonpolicy.org/reports/income.html
(finding median incomes of incarcerated men and women to be 52% and 42% (respectively)
lower than those of non-incarcerated people).
15 Becky Pettit, Invisible Men: Mass Incarceration and the Myth of Black Progress 15-16 (2012)
(finding that 52.7% and 61.8% of white and black males, respectively, in prisons and jails did not
complete high school).
16 See Lucius Couloute & Daniel Kopf, “Out of Prison & Out of Work: Unemployment among
Formerly Incarcerated People,” (Jul. 2018), https://www.prisonpolicy.org/reports/outofwork.html
(although data is lacking on pre-incarceration unemployment rates, people released from custody
are five times more likely to be unemployed than the general U.S. population).
17 U.S. Dept. of Justice, Bureau of Justice Statistics, “Indicators of Mental Health Problems
Reported by Prisoners and Jail Inmates, 2011-12,” NCJ Pub. No. 250612 (June 2017), available
at https://www.bjs.gov/content/pub/pdf/imhprpji1112.pdf (finding prevalence of serious
psychological distress among incarcerated people at rates of five times that of the nonincarcerated population).
18 See infra § II.D.4.
19 Company Giving Tablets to NY Prisoners Expects to Get $9M from Inmates over 5 years,”
NYUp.com, Feb. 15, 2018, http://s.newyorkupstate.com/oIgNXak (quoting New York
Assemblyman Clifford W. Crouch (R-Bainbridge)).
20 Frank Zimring, “The New Politics of Criminal Justice: Of ‘Three-Strikes,’ Truth-inSentencing, and Megan’s Laws,” in Perspectives on Crime and Justice: 1999-2000 Lecture
Series 1, 6, Nat’l Institute of Justice, NCJ Pub. No. 184245 (Mar. 2001).

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family members of incarcerated people who often bear the financial punishment
of paying for phone calls or commissary items, even though families have not
been sentenced to any term of punishment.
B. Payers
Much of the money spent at prison retailers comes from families and
friends of the incarcerated, either directly or indirectly. People typically enter
prison with little or no money and earn shockingly low wages while
incarcerated, to the extent they are employed at all. 21 Historically, this meant
limited opportunities to purchase goods or services inside correctional facilities,
due to the lack of a viable customer base. But the rising prevalence and falling
price of electronic payments have made it increasingly feasible to collect
payments (even in small amounts) from non-incarcerated payers (the following
discussion uses the term “family member” as shorthand for a non-incarcerated
payer, whether it be a child, other relative, friend, or attorney).
Direct payments can take several forms. In the case of
telecommunications, the family member can be a party to the transaction being
purchased—for example, as the recipient of a collect call. Families can also
purchase some tangible goods through prison commissaries, although these
purchases are sometimes limited to bundled “care packages.” 22 Alternatively,
family can pay for specific services by sending an advance payment that is held
by the vendor.
Indirect purchasing entails a family member transferring money to an
incarcerated recipient who then uses the funds to make a subsequent purchase.
The funds are held by the correctional facility in a pooled deposit account,
typically referred to as an “inmate trust account.” 23 Once the money is in the
trust account, the recipient can usually use it for any purpose not prohibited by
prison regulations. Assuming that the transferor trusts the recipient to manage
his or her own funds, transfers to trust accounts have the benefit of versatility—
the money in a trust account can be used for a variety of purposes, and is not
restricted to one specific service or vendor, in contrast to prepaid services
where payments are locked into a specific vendor and/or service, and are
usually nonrefundable and subject to arbitrary expiration provisions.
The benefit of trust-fund versatility is offset in many jurisdictions by
mandatory deductions from trust accounts to cover fines, victim restitution, or
costs of confinement. 24 These mandatory deductions can have the effect of

21

Wendy Sawyer, “How much do incarcerated people earn in each state?” Prison Policy
Initiative Blog (Apr. 10, 2017), https://www.prisonpolicy.org/blog/2017/04/10/wages/ (national
survey finding hourly wages of 14¢ - $1.41 for incarcerated workers).
22 Taylor Elizabeth Eldridge, “The Big Business of Prisoner Care Packages: Inside the Booming
Market for Food in Pouches,” Prison Legal News v.29, n.10 (Oct. 2018), at 28-30 (profiling
major sellers of prison care packages).
23 See infra note 57 and accompanying text.
24 See e.g., 3 Michael B. Mushlin, Rights of Prisoners § 16:20 (5th ed. rev. 2018) (discussing
attachment of financial assets held by incarcerated people); “Deductions from Pennsylvania
prisoner’s trust account require notice,” Prison Policy News v.29, n.11 (Nov. 2018) (discussing
Pennsylvania law); Or. Rev. Stat. § 423.105 (mandatory deductions of 10-15% from all trust
account deposits).

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steering payers to economically inefficient transactions, such as prepaid phone
accounts or care packages, in an effort to avoid loss of funds through
mandatory deductions.
C. Facilities
Correctional facilities play two significant roles in prison retailing.
First, and most obviously, the facility selects the vendors who sell goods and
services, usually under a long-term contract that grants the vendor the exclusive
right to sell certain items in the facility. Second, the facility may receive
compensation under the contract, thus giving correctional managers a direct
financial interest in prison-retail revenue.
Any discussion of facilities must begin with an important distinction
that is often overlooked in the popular press: prisons and jails are remarkably
different in both their operations and demographics. Prison systems are limited
in number (fifty state departments of corrections, plus the federal Bureau of
Prisons) and are typically large enough to command certain economies of scale
and employ experienced procurement staff. 25 In contrast, the nation’s jails
consist of a sprawling patchwork of facilities run by approximately 2,850
different jurisdictions. 26 Many jails are small with limited resources—over
one-third of people in jail are held in facilities with total populations of less
than five hundred. 27
The size of a correctional system is usually reported in terms of daily
population—a snapshot of population on a given day. This metric disguises
population turnover, most notably the significant amount of “jail churn.” State
prison systems hold approximately 1.3 million people on any given day,
compared to 615,000 people held in local jails; 28 however, nine to ten million
individuals are sent to jail every year, compared to roughly 600,000 prison
admissions. 29 In the eyes of a prison-retail firm, the numerous people entering
or leaving jails, and the family members with whom they communicate, add up
to a broad and lucrative pool of captive customers.
Many facilities have a financial interest in prison retailing because they
receive consideration from vendors. Such consideration can come in the form
of a “site commission” (a predetermined percentage of sales revenue) or other
types of monetary or in-kind payments. Defenders of the prison-retail sector
often attempt to justify vendors’ monopolist privileges by arguing that prices
are subject to market competition when facilities solicit and evaluate bids. 30
25 The smallest state prison system (North Dakota) housed approximately 1,700 people in 2014,
but two-thirds of the states ran prison systems with populations over 10,000. U.S. Dept. of
Justice, Bureau of Justice Statistics, “Prisoners in 2014,” NCJ Pub. No. 248955, tbl. 2 (Sept.
2015), available at https://www.bjs.gov/content/pub/pdf/p14.pdf.
26 U.S. Dept. of Justice, Bureau of Justice Statistics, “Jail Inmates in 2016,” NCJ Publication No.
251210, tbl. 4 (Feb. 2018), available at https://www.bjs.gov/content/pub/pdf/ji16.pdf.
27 Id.
28 Wagner & Sawyer, supra note 1.
29 Id. at n.2 and accompanying text (discussing jail churn); U.S. Dept. of Justice, supra note 25,
tbl. 8.
30 GTL, Securus, and CenturyLink all made this argument in the FCC’s 2013 rulemaking. See
Reply Comments of Stephen A. Raher, In the Matter of Rates for Interstate Inmate Calling

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Although this theory is becoming increasingly dubious in light of industry
consolidation, 31 it was never on strong ground to begin with, because a
facility’s interest in increasing commission revenue operates to drive end-user
prices higher.
After conducting an extensive economic review of the inmate calling
service (“ICS”) industry, the Federal Communications Commission (“FCC”)
found that competition in the procurement process did not result in competitive
or fair rates for end users. 32 Shortly before the FCC revived its previously
moribund ICS rulemaking in 2012, a nationwide survey of prison phone
contracts found commission rates of up to 60%, with an average nationwide
rate of 42%. 33 Based on a review of confidential carrier financial data, the FCC
determined that governments collected site-commission revenue of over $460
million in 2013. 34 In 2015, after years of study, the FCC sought to rein in
commissions by declaring that such payments to facilities were not recoverable
costs for purposes of ICS rate setting. 35 Although this regulation was
eventually invalidated by an appellate court, 36 in the interim, the industry
quickly discovered new ways of providing valuable consideration to facilities
without invoking the formal label of a site commission. 37 One trend in new
compensation structures is for a vendor to avoid commissions expressed as a
percentage of sales, and instead negotiate a fixed lump-sum or recurring
payment to the facility based on anticipated revenue. 38 Securus’s 2016
financial statements indicate that the company is obligated to make over $84
million in such guaranteed payments to facilities over the following five
years. 39
Services, WC Docket No. 12-375, at 5, n.21 (Apr. 22, 2013) (collecting citations), available at
https://www.fcc.gov/ecfs/filing/6017320127.
31 See infra § IV.D
32 In the Matter of Rates for Interstate Inmate Calling Services, WC Docket No. 12-375, Report
and Order and Further Notice of Proposed Rulemaking [hereinafter “First Report & Order”] ¶ 40,
28 FCC Rcd. 14107, 14128-14129 (Sept. 26, 2013) (“While the process of awarding contracts to
provide ICS may include competitive bidding, such competition in many instances benefits
correctional facilities, not necessarily ICS consumers—inmates and their family and friends who
pay the ICS rates, who are not parties to the agreements, and whose interest in just and reasonable
rates is not necessarily represented in bidding or negotiation.”).
33 John E. Dannenberg, “Nationwide PLN Survey Examines Prison Phone Contracts, Kickbacks”
Prison Legal News, v.22, n.4., at 1-3 (Apr. 2011).
34 In the Matter of Rates for Interstate Inmate Calling Services, WC Docket No. 12-375, Second
Report and Order and Third Further Notice of Proposed Rulemaking [hereinafter “Second Report
& Order”] ¶ 122, 30 FCC Rcd. 12763, 12821 (Nov. 5, 2015).
35 Id. at ¶ 118, 30 FCC Rcd. at 12819 (“After carefully considering the evidence in the record, we
affirm our previous finding that site commissions do not constitute a legitimate cost to the
providers of providing ICS.”).
36 See infra, text accompanying notes 187-196.
37 Peter Wagner & Alexi Jones, State of Phone Justice (forthcoming 2019).
38 See Pearson v. Hodgson, No. 18-cv-11130-IT, 2018 WL 6697682, * (D. Mass. Dec. 20, 2018)
(2011 contract between Securus and county jail provided 47% site commission, but was amended
in 2015 to replace commission with a flat $820,000 payment to county in exchange for a fouryear extension of the contract).
39 Securus Technologies Holdings, Inc. and Subsidiaries, “Consolidated Financial Report:
December 31, 2016” at 26 (RSM US, LLP, independent auditor) (Feb. 28, 2017) (on file with
author).

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As facilities explore new ways to profit from prison retailing, the
number and type of potential conflicts-of-interest has dramatically increased.
For example, when facilities receive commissions from an electronic messaging
system, 40 they may boost commission revenue by either banning postal mail 41
or implementing policies that make mail cumbersome and impractical.42 Or if a
facility receives a commission from a tablet-based e-book program, it might
prohibit books from being sent to incarcerated people through the mail. 43 Such
conflicts will only become more pronounced as the prevalence of prison
retailing grows.
D. Vendors
The final component of any prison retail transaction is the company
that sells goods or services, and reaps the profits therefrom. Historically, these
firms were niche companies that focused on a particular product, such as
telephone service. These legacy companies have largely been absorbed by and
consolidated into conglomerates that sell a variety of products pursuant to
bundled contracts with facilities. Most of these new conglomerates (see Table
1) are owned by private equity firms. 44 The prevalence of private equity
ownership is not surprising given the tendency of prison-retail firms to enjoy
40

Stephen Raher, You’ve Got Mail: The Promise of Cyber Communication in Prisons and the
Need for Regulation at 11-12 (Jan. 2016), https://www.prisonpolicy.org/messaging/report.html
(discussing common commission structures).
41 Jails in at least thirteen states have banned all incoming mail except for postcards. See Prison
Policy Initiative, “Protecting Letters from Home,” https://www.prisonpolicy.org/postcards/
(accessed Jan. 4, 2019).
42 Some facilities have striven to make mail slower and less personal by requiring all incoming
mail to be scanned and either reprinted or distributed electronically through tablets), often citing
dubious security concerns. See e.g., Samantha Melamed, “‘I Feel Hopeless’: Families Call New
Pa. Prison Mail Policy Devastating,” Pittsburg Post-Gazette (Oct. 17, 2018), https://www.postgazette.com/news/politics-state/2018/10/17/sci-pennsylvania-prison-mail-policy-familiesdevastating/stories/201810170130 (new policy of scanning and reprinting incoming mail, based
on allegations of drug smuggling, results in “missing pages, misdirected letters, weekslong
delays, and copies so poor as to be illegible”); Katie Meyer, “Pennsylvania Prison Officials
Change Mail Handling after Drug-Related Illnesses,” National Public Radio (Sep. 5, 2018),
https://www.npr.org/2018/09/05/644973472/pennsylvania-prison-officials-ban-inmate-mail-inresponse-to-drug-related-illnes (discussing questionable evidence of drug-smuggling through the
mail); WINK, “Charlotte County Jail Introduces Inmates to New Communication Tablets” (Dec.
4, 2017), https://www.winknews.com/2017/12/04/charlotte-county-jail-introduces-inmates-newcommunication-tablets/ (incoming mail to be scanned and distributed electronically on tablets).
43 Samantha Melamed, “One Review of Pa. Prisons’ Pricey Ebooks: ‘Books That Are Available
For Free, That Nobody Wants Anyway,’” Philadelphia Inquirer (Sept. 21, 2018),
http://www.philly.com/philly/news/pennsylvania-department-corrections-books-through-barsphilly-new-jim-crow-malcolm-x-20180921.html?__vfz=medium%3Dsharebar. The
Pennsylvania Department of Corrections receives a 30.5% commission on all e-book sales.
Contract Between Commw. of Penn. Dept. of Corr. and Global Tel*Link, Contract No. AGR-346
[hereinafter “Pennsylvania-GTL Contract”], appx. D (Cost Matrix, revised Dec. 14, 2012) (on
file with author).
44 As a rough indicator of company value, Platinum Equity purchased Securus in 2017, it told
regulators that it had arranged a loan of “up to an aggregate principal amount of $2.6 billion” to
fund the transaction. See Letter to Connecticut Public Utilities Regulatory Authority from
Raechel K. Kummer (counsel for Abry) and Catrina C. Kohn (counsel for Platinum Equity), Dkt.
No. 00-12-20 (Jun. 15, 2017) (on file with author) (one of several identical disclosures filed with
state public utility commissions concerning the Securus acquisition).

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high barriers to entry (long-term exclusive contracts with facilities, high capital
requirements in the form of network build-outs, and increasing use of patents),
dependable revenue streams (incarcerated customers and their families will
prioritize paying for essential items like phone calls or basic hygiene items),
and the potential for substantial revenue growth (as facilities become more
receptive to allowing new fee-based services, like tablets). The following
sections describe the basic contours of four major subsectors of prison retailing:
telecommunications, commissary sales, financial services, and computer
tablets.
Table 1. Dominant Prison Retail Firms
Company
Products/Services Subsidiaries (not
comprehensive)
Global
Telecom, tablets,
TouchPay Holdings
Tel*Link/GTL
correctional banking
(correctional banking)

Securus
Technologies

Telecom, tablets
correctional banking

Trinity Services
Group

Commissary,
telecom, correctional
banking

Union Supply
Group

Commissary

JPay (correctional banking)
Satellite Tracking of People
(non-prison electronic
monitoring)
Cara Clinicals (electronic
health records)
Keefe Group (commissary)
ICSolutions (ICS)
Access Corrections
(correctional banking)
unknown

Ownership
American Securities
(purchased GTL in 2011,
from Veritas & Goldman
Sachs Direct, which jointly
owned the company for two
years).
Platinum Equity (purchased
Securus in 2017 from Abry
Partners, which acquired the
company from Castle
Partners in 2013).
H.I.G. Capital

unknown

1. Telecommunications
Any discussion of prison retailing must begin with
telecommunications, given the comparatively long history of the ICS industry.
Since the mid-twentieth century ascendance of the public switched telephone
network, incarcerated people have typically had three methods of
communication: letters, in-person visitation, and telephone. 45 These different
channels were historically insulated from naked rent-seeking. Postal rates were
set to cover the broad costs of the postal network with its universal service
mandate. 46 In-person visiting often entailed outlays of time and money on the
part of the visitor, but did not produce significant revenue for facilities or
private sector firms. Finally, telephone rates were set by state and federal
agencies who oversaw the highly regulated industry dominated by the Bell
45 Stephen Raher, Phoning Home: Prison Telecommunications in a Deregulatory Age, in 2 Prison
Privatization: The Many Facets of A Controversial Industry (Byron E. Price & John C. Morris,
eds.) 215, 219-220 (2012).
46 Richard B. Kielbowicz, Preserving Universal Postal Service As A Communication Safety Net:
A Policy History and Proposal, 30 Seton Hall Legis. J. 383, 400-411 (2006).

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System and smaller independent operators. 47 Phone pricing changed gradually
but dramatically following the break-up of the Bell System and the subsequent
passage of the Telecommunications Act of 1996, which led to a proliferation of
new companies in the ICS space, attracted by the prospects of high call
volumes and unchecked rates. 48
The contemporary ICS industry is dominated by two non-facilitiesbased telecommunications carriers that use VoIP-based platforms operating on
lines leased from local exchange carriers. These companies—Securus and
GTL—have collectively absorbed dozens of competitors since the 1990s. 49
The FCC determined that Securus, GTL, and a third company, Telmate,
controlled 85% of the ICS telephone market (measured by revenue) in 2013. 50
In 2017, GTL acquired Telmate. 51
Securus and GTL are aggressively pursuing new revenue sources, both
in terms of emerging telecommunications technology and non-telecom business
lines. As for the former category, so-called “video visitation” and electronic
messaging are the latest newcomers. Video visitation allows incarcerated
customers to communicate in real-time video with callers in the free world.
Although this technology holds great promise, in that it allows for audio-visual
communication across great distances, these benefits have been overshadowed
by high rates and the efforts of some providers to couple video visitation with
prohibitions on in-person visiting. 52 Electronic messaging allows for the
exchange of written messages (sometimes two-ways, other times only on an
incoming basis), somewhat like email, but without many of the technical
features that free-world users have come to take for granted. Like video
visitation, electronic messaging is potentially beneficial technology, but is
known for high prices and unfair terms (such as stingy character limits on
messages). 53
2. Commissary
Commissaries generally make money by acting as the only authorized
vendor of items that are necessary for a comfortable existence, but which are
not provided by prison facilities. Commissary inventories typically focus on
food (to supplement meager cafeteria meals), healthcare items, hygiene
products, letter-writing supplies, religious items, and basic staples of everyday
life like eating utensils, extension cords, and cleaning supplies.

47

Raher, supra note 45, at 217-218.
Id. at 218.
49 Wagner & Jones, supra note 37.
50 Second Report & Order, supra note 34 at ¶ 76, 30 FCC Rcd. 12801.
51 Peter Wagner, “Prison Phone Giant GTL Gets Bigger, Again,” Prison Policy Initiative Blog
(Aug. 28, 2017), https://www.prisonpolicy.org/blog/2017/08/28/merger/.
52 Bernadette Rabuy & Peter Wagner, Screening Out Family Time: The For-Profit Video
Visitation Industry in Prisons and Jails (Jan. 2015),
https://www.prisonpolicy.org/visitation/report.html.
53 See generally Raher, supra note 40.
48

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The size of the prison commissary industry is difficult to estimate, but
likely exceeds $1.6 billion in annual revenue. 54 Average purchases per
customer vary widely by correctional facility (due to different regulations
concerning allowable property and fluctuations in prices), but are often $600900 annually. 55 While there are likely more commissary operators in the field
than telecommunications firms, there has still been a wave of consolidation, 56
with two companies dominating the commissary market—Union Supply
Group, Inc. and private-equity owned Keefe Group. Unlike ICS, there seem to
be a greater number of small fringe competitors in the commissary industry,
perhaps because of lower capital requirements.
3. Money Transmitters, Correctional Banking, and Release
Cards
As previously discussed, incarcerated people rely largely on outside
friends and relatives for the funds necessary to purchase goods and services
inside. This structure has led to the proliferation of companies that profit from
facilitating such transfers. Money transfers come in two varieties: transfers to
inmate trust accounts, and payments for goods or services.
Inmate trust account is a term of art (specific terminology varies by
jurisdiction) describing a deposit account held by a governmental entity for the
benefit of an incarcerated person. 57 Historically, inmate trust accounting has
been a mundane subspecialty of government accounting: agencies collected
funds in the possession of people who come into custody, received deposits
(i.e., wages earned during incarceration or money orders received from
families), issued checks or money orders for miscellaneous purchases, and
ensured that account balances were disbursed to the accountholder upon his or
her release from custody. Now, many agencies wish to outsource the
management of such accounts, often bundling the straightforward tasks of trust
fund accounting with other “correctional banking” services.
Traditionally, a family member would deposit funds to an trust account
by sending a money order to the facility. While this funding method requires
time for mailing, it has the benefit of allowing transferors to choose among a
variety of money-order issuers operating in a competitive market. 58
54 Stephen Raher, The Company Store: A Deeper Look at Prison Commissaries, n.3 and
accompanying text (May 2018), https://www.prisonpolicy.org/reports/commissary.html.
55 Id.
56 Stephen Raher, “Paging Anti-trust Lawyers: Prison Commissary Giants Prepare to Merge,”
Prison Policy Initiative Blog (Jul. 5, 2016),
https://www.prisonpolicy.org/blog/2016/07/05/commissary-merger/.
57 See e.g., Cal. Penal Code § 5008 (Dept. of Corrections and Rehabilitation Secretary “shall
deposit any funds of inmates in his or her possession in trust with the Treasurer”); Tex. Gov’t
Code Ann. § 501.014 (“The department shall take possession of all money that an inmate has on
the inmate's person or that is received with the inmate when the inmate arrives at a facility to be
admitted to the custody of the department and all money the inmate receives at the department
during confinement and shall credit the money to an account created for the inmate.”); see also
N.Y. Correct. Law § 187(3) (statute establishes trust accounting system, but only for wages
earned).
58 See U.S. Postal Serv., Ofc. of Inspector General, Modernizing the Postal Money Order, Rpt.
No. RARC-WP-16-007, at 8-10 (Apr. 2016) (summarizing the market of money-order issuers).

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Contractors that hold correctional banking contracts tend to steer transferors
away from low-cost money orders, in favor of an array of electronic or inperson payments, all of which carry high fees. Oddly, automated clearing
house (“ACH”) transfer is the one common payment channel that is hardly ever
an option for trust-fund transfers, which can be an inconvenience for some
customers. 59 It remains unclear why vendors do not accept ACH payments
(especially given the security advantages of ACH compared to payment
cards 60), although one possibility could be a desire to avoid security-related
investments that are required of online ACH originators. 61
As prison retailing opportunities grow, controlling access to the trust
account begins to look more like an essential facility. Incarcerated people are
increasingly expected to spend money on various goods and services. But to
engage in such transactions, money must typically be transferred into the
purchaser’s trust account. Placing exclusive access to trust account deposits in
the hands of one firm looks like a bottleneck monopoly, 62 hurting both family
members and prison retailers who are not affiliated with the bottleneck
provider.

59 Trust fund transfers via a credit card will most likely incur cash advance fees. See e.g., Visa
Core Rules and Visa Product & Service Rules at 838 (Oct. 2018) (defining “quasi-cash
transaction” as a sale of “items that are directly convertible to cash,” including deposits and
money orders). Payments by debit card can avoid cash-advance fees, but 10% of checking
account holders do not have a debit card. Claire Greene & Joanna Stavins, “The 2016 and 2017
Surveys of Consumer Payment Choice: Summary Results,” Fed. Reserve Bank of Boston
Research Data Rpt. No. 18-3, at tbls. 1 and 3 (May 2018) (91.8% of respondents reported having
a checking account, but only 81.4% had debit cards).
60 Payment-card transactions are associated with substantially higher rates of fraudulent payments
than ACH transfers. Bd. of Governors of the Fed. Reserve System, Changes in U.S. Payments
Fraud from 2012 to 2016: Evidence from the Federal Reserve Payments Study, figs. 8 and 14
(Oct. 2018) (finding a fraud rate of 0.48 (by number of transactions) for ACH debit transfers,
versus 16.33 basis points for card-not-present transactions).
61 See Nat’l Automated Clearinghouse Ass’n, Operating Rule § 2.5.17.4 (2018) (additional
warranties required for online ACH origination). Vendors that accept payment cards are likely
expected, directly or indirectly, to comply with the Payment Card Industry Data Security
Standards, but these rules are largely focused on protecting confidential payment information in
possession of a merchant, or during transmission. See Generally, “PCI Security Standards
Council, Requirements and Security Assessment Procedures,” ver. 3.2.1 (May 2018),
https://www.pcisecuritystandards.org/documents/PCI_DSS_v3-2-1.pdf. In contrast, ACH
security requirements are more focused on identity verification and fraud detection.
62 See generally James McAndrews, “Antitrust Issues in Payment Systems: Bottlenecks, Access,
and Essential Facilities,” Fed. Reserve Ban of Philadelphia: Business Review 3 (Sept. 1995).

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The other common type of money transfer is a payment directly to a
vendor. These
payments may be
contemporaneous
payments for
goods or services;
but, companies are
increasingly
encouraging
customers to
prepay, often
subject to
confusing and
abusive terms of
Figure 1. Union Supply Group Prepayment Ad.
service. While
Source: CaliforniaInmatePackage.com
prepayments are
most common in the telecommunications subsector, 63 commissary companies
have also begun experimenting with prepayment options, possibly as a way to
boost frequent small-dollar purchases of digital content. Although Keefe
Group prominently states that its prepaid option is not the same as a trustaccount deposit, Access Corrections does not (see Figure 1), leaving the
possibility that some customers may use Access’s prepayment option under the
mistaken assumption that they are sending money to a trust account.
The final financial transaction associated with a term of incarceration
comes when a facility owes money to a person upon his or her release.
Typically this money consists of the final balance of an inmate trust account,
although in the case of jails, it could simply be a refund of money that the
releasee had in their possession at the time of arrest. The “release card” is a
specialized payment product that has arisen specifically for this type of
disbursement. Release cards are open loop prepaid debit cards (typically
branded as a MasterCard) which facilities use to make required payments to
people upon their release. While there is nothing per se impermissible about
making such payments via prepaid debit card, problems arise when facilities are
unwilling to pay the costs of such a system. Under most release-card contracts,
the correctional agency pays nothing and the card issuer makes money by
charging cardholders a panoply of exorbitant fees. 64 Making matters worse,
most facilities that utilize release cards do not give people an option to receive
release payments via a different method.
Correctional banking is big business. A rough extrapolation based on a
small dataset (from four states) suggests that the principal amount of money
transfers to people in state prison systems could be around $1 billion a year. 65
63

See infra § III.A.
Comments of Prison Policy Initiative, Prepaid Accounts under the Electronic Fund Transfer
Act (Regulation E) and the Truth in Lending Act (Regulation Z), Dkt. No. CFPB-2014-0031
(Mar. 18, 2015), available at https://static.prisonpolicy.org/releasecards/CFPB-comment.pdf.
65 Stephen Raher, “The multi-million dollar market of sending money to an incarcerated loved
one,” Prison Policy Initiative Blog (Jan. 18, 2017),
https://www.prisonpolicy.org/blog/2017/01/18/money-transfer/.
64

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Another indicator of the profits that can be extracted from correctional banking
comes from Securus’s 2015 acquisition of JPay. There is no public evidence of
how much Securus paid, but the 2017 acquisition of Securus by private equity
firm Platinum Equity provides a clue. The 2017 deal document discloses
Securus’s liability on an earnout provision from its 2015 acquisition of JPay.
Specifically, the disclosure suggests that by 2017, Securus would likely owe
JPay’s founder and other original owners about $20 million under the earnout
clause (of course, this is on top of whatever money the founders received in
2015 when the sale actually closed). 66
4. Tablets: The New Frontier
The newest products to gain traction in the prison retail market are
specialized computer tablets that provide communications, education, and
entertainment functions, usually operating on a closed wireless network, but
never with internet connectivity. 67 Reviewers have found these tablets to be the
technological equivalent of already-obsolete early-model handheld devices. 68
But tablets promise to help correctional staff by managing populations that
suffer from chronic boredom. 69 At the same time, the devices help prison
retailers dramatically expand revenue opportunities. Many tablet programs,
particularly in prison systems, provided tablets to users for free, but most
features and content can only be accessed for a fee. 70 Such fees tend to
dramatically exceed free-world prices, and there is no obvious cost-based
reason for such pricing. 71 In facilities where tablets are not provided for “free,”
customers must either purchase a tablet (prices can range from $40-160) or pay
a rental fee that can be between $5 and $150 per month. 72
66 Stock Purchase Agreement between Securus Investment Holdings, LLC, Connect Acquisition
Corp., and SCRS Acquisition Corp. § 6.3 (Apr. 29, 2017) (on file with author).
67 As a general rule, incarcerated people are entirely unable to access the internet, either as a
matter of agency policy or state law. See generally, Titia A. Holtz, Note, Reaching out from
behind Bars: The Constitutionality of Laws Barring Prisoners from the Internet, 67 Brook.
L.Rev. 855, 859-866 (2001-02) (surveying laws prohibiting internet access in correctional
facilities).
68 Jason Koebler, “A Clear Plastic Tablet for Prisoners: The Motherboard Review,” Vice.com
(Dec. 15, 2014), https://motherboard.vice.com/en_us/article/pgav3m/a-clear-plastic-tablet-forprisoners-the-motherboard-review (“Technology in prisons is dismal, and the JP4 [JPay tablet]
looks and feels like a Game Boy Advance. It’s clunky and it’s old and it’s not at all that intuitive
to use. But when your options are limited, I suppose you’ll take whatever you can get.”).
69 Without citing any evidence, GTL claims that its tablets produce “[s]ignificant decreases in
inmate-on-inmate assaults, inmate-on-officer assaults, and rule and behavior code violations.”
GTL, “Inspire Tablet Program Facility Benefits,” http://www.gtl.net/wpcontent/uploads/2018/05/GTL-Facility_Benifits.pdf.
70 See generally, Wanda Bertram & Peter Wagner, “How to spot the hidden costs in a ‘no-cost’
tablet contract,” Prison Policy Initiative Blog (Jul. 24, 2018),
https://www.prisonpolicy.org/blog/2018/07/24/no-cost-contract/.
71 See infra, text accompanying notes 98-109.
72 Tablet pricing varies widely by facility and vendor. Some examples are: GTL’s $147 price tag
for tablets in the Pennsylvania prison system. See infra note 105 and accompanying text. JPay’s
tablet prices have been reported as ranging from $40 to $160. See infra note 134. Union Supply
Group sells a tablet for $159. See infra note 136. As for rented tablets, Securus’s website lists
eighteen county jails and one state prison system that allow month-to-month rentals, at prices
ranging from $5 to $30 per month. Securus Technologies, Inc. “Order the SecureView Tablet for
your loved one,” https://www.securustablet.com/#/plans/start (accessed Dec. 2, 2018). The jail in

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Prison tablet programs are nearly universal in their offering of video
games. No one has articulated the troublesome dynamic of encouraging videogame usage among incarcerated populations more persuasively than an
unnamed resident of the Colorado Department of Corrections who told
Denver’s Westword newspaper:
The average prisoner will play games and music 8-10 hours a day, just
like any kid in America. Only they aren’t kids; they are men and
women who need rehabilitation and education. This buys a lot of
safety for prison staff, but what a waste of time for the prisoners. If
they provided education, it would be marvelous. Prisoners might just
learn something useful and not come back. 73
There is also something unsettling about promoting a product that could
plausibly lead to addiction and dependency 74 among a population with
disproportionate rates of substance abuse. 75
Tablets do have potential to assist in educational programming, but
only if adequate resources are invested in content and instruction. Technology
by itself is not a solution. Although tablet providers are eager to hype
educational uses, evidence of actual effective, salient, and high-quality content
is lacking. To the extent that facilities are providing educational technology
without also investing in instructors and curriculum, the educational potential
will never be realized, for lack of socially-mediated pedagogy.
To illustrate the confusion about educational offerings, one need only
visit JPay’s main webpage for family members, which includes a prominent
banner ad touting the educational promise of its JP5 tablet (see Figure 5).
Following the link, however, reveals that the tablet only provides access to an
educational platform; content and instruction are apparently the responsibilities
of others. 76 Following yet another link brings the user to the webpage for
JPay’s education program, which features stock images of graduation
ceremonies, an emotionally manipulative video advertisement, vague
statements about innovation and “leading-edge technology,” but absolutely no
discussion of how facilities have obtained content and instruction, what
facilities use the platform, or quantifiable outcomes. 77
The versatility of tablets is both their major selling point and a
wellspring of potential conflicts of interest. When a facility stands to
financially profit from tablet usage, the opportunities for mischief are

Knox County, Tennessee rents tablets for $4.99 per day, which can result in a monthly rate of
approximately $150. See infra note 111 and accompanying text.
73 Alan Prendergast, “Colorado prisoners getting ‘free’ electronic tablets—with a catch,”
Westword (Feb. 15, 2017), available at http://www.westword.com/news/colorado-prisonersgetting-free-electronic-tablets-with-a-catch-8795689.
74 World Health Org., “Management of Substance Abuse: Gaming Behaviour,”
http://www.who.int/substance_abuse/activities/gaming_disorders/en/ (Sept. 2018).
75 U.S. Dept. of Justice, Bureau of Justice Statistics, Drug Use, Dependence, and Abuse Among
State Prisoners and Jail Inmates, 2017-2009, NCJ Rpt. No. 250546 (Jun. 2017) (58% and 63% of
residents of state prisons and jails, respectively, meet diagnostic criteria for drug dependence or
abuse, compared to 5% of the general population).
76 JPay, Inc., “Education,” https://www.jpay.com/education.aspx (accessed Nov. 27, 2018).
77 JPay’s Lantern, main page, http://jpayslantern.com/education/ (accessed Nov. 27, 2018).

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numerous: in-person visits can be prohibited in favor of video visitation; 78
prison libraries or donated books can be cut off and replaced with e-books for
purchase; 79 postal mail can be restricted in order to increase electronic
messaging usage; 80 and educational programs can be curtailed to redirect
students to online-only courses. 81
III.

Unfair Industry Practices

Prison retailing is not only built on a generally inequitable business
premise, but current industry leaders also use specific practices that are unfair,
deceptive, or abusive. Some of these practices are potentially unlawful, while
others are unseemly but legal. It can be difficult, however, to pin down
company practices because of the pervasive lack of transparency that
characterizes the entire correctional sector.82 Bureaucratic hostility to
transparency can result in information asymmetry that causes some consumers
to spend money without fully understanding the terms of the transaction.
Others who do understand the vendor’s terms are nonetheless unable to avoid
them.
Unfair practices that are publicly-known are highly structured,
bespeaking corporate cultures dominated by greed. When plaintiffs challenging
ICS rates and practices referenced the greed of the industry, Circuit Judge
Richard Posner dismissed the characterization by remarking that the prison
system is “said to be motivated by greed, but greed that is institutional rather
than personal. Far from being mere agents of the phone companies, the prisons
are in the driver’s seat, because it is they who control access to the literally
captive market constituted by the inmates.” 83 On the one hand, Posner is
correct in pointing out the power exercised by correctional agencies, and his
framing of the issue seems to be a defense of public budgeting decisions—a
normative matter that many would agree is subject to judicial review only for
the limited purpose of ensuring compliance with applicable constitutional or
78 Matt Lakin, “Point, Click, But No Touch: Debate Shapes up over Video Visitation at Knox
Jail,” Knoxville News Sentinel (Nov. 24, 2018),
https://www.knoxnews.com/story/news/crime/2018/11/25/jail-video-visitation-knox-county-faceface/2027042002/ (county jail received $79,000 over four years in commissions from video
visitation after prohibiting in-person visits); Steve Horn & Iris Wagner, “Washington State: Jail
Phone Rates Increase as Video Replaces In-person Visits,” Prison Legal News v.29, n.10 (Oct.
2018), at 1.
79 See infra note 103 and accompanying text.
80 See supra, notes 41-42.
81 Although the author did not find any documented cases of online fee-based courses replacing
in-person instruction, as a general matter, total prison spending on education decreased on a
nationwide basis by 6% between 2009 and 2012. Lois M. Davis, et al., “Correctional Education
in the United States: How Effective Is it, and How Can We Move the Field Forward,” RAND
Corp. (2014), at 3.
82 See Confronting Confinement: A Report of the Commission on Safety & Abuse in America’s
Prisons 102 (John Gibbons & Nicholas Katzenbach, co-chairs) (Jun. 2006) (“The prevailing view
of correctional facilities as shrouded and unknowable reflects the shortage of meaningful and
reliable data about health and safety, violence and victimization; ignorance about what
information is available; and the difficulty of accessing and interpreting much of the data that
corrections departments collect but do not widely disseminate or explain.”).
83 Arsberry v. Illinois, 244 F.3d 558, 566 (7th Cir. 2001).

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statutory requirements. Nonetheless, this pat formulation ignores the very real
greed on the part of private equity companies that have built a business model
based on using the coercive power of the state to extract revenue from poor
people, in the form of exorbitant prices for phone calls or junk food. 84 Of
course, greed is not necessarily illegal. It can, however, motivate companies to
use particular practices that are unlawful. This section discusses common types
of unfair practices, while the subsequent section explores potential legal
remedies.
A. Masquerading as Cream: Inflated Prices and Inefficient Payment
Systems
Things are seldom what they seem
Skim milk masquerades as cream
—H.M.S. Pinnafore, act II, scene 1 85
The leading complaints from prison-retail customers focus on high
prices and payment mechanisms that are inefficient, confusing, or otherwise
unfair. Although prison retailers are likely to make vague claims of security in
response to such complaints, these arguments often do not hold up under
scrutiny and it is difficult to see prison-retail prices as anything other than
premium rates charged for inexpensive, run-of-the mill goods or services.
Moreover, while vendors are quick to point out the security features which add
to their costs, they conveniently gloss over expenses incurred by free-world
retailers that are inapplicable in a prison setting (such as advertising and
operating a brick-and-mortar retail network).
Unlike other prison retail subsectors, the factual record concerning ICS
prices is robust thanks to the multi-year rulemaking conducted by the FCC.
The Commission’s involvement with the industry dates back to 1993, when ICS
carriers asked the FCC to deregulate payphone rates in correctional facilities.
The FCC ultimately granted the request mere days before the entire
telecommunications industry changed with the enactment of the
Telecommunications Act of 1996. 86 As part of Congress’s sweeping
reorganization of wireline phone service, section 276 of the 1996 Act directed
the FCC to ensure that payphone operators were “fairly compensated,” while
also classifying all “inmate telephone service in correctional institutions” as per
se “payphone service.” 87 Armed with this provision, ICS carriers quickly took
84

It is difficult to overstate the disadvantage that the public has in not being able to gain a clear
picture of vendor finances. Securus, for example, markets itself to facilities as a “partner” that
puts facilities ahead of its own profits, as supposedly evidenced by Securus’s below-market
EBITDA. Securus RFP Response, infra note 154, at 13. While Securus’s healthy EBITDA ratio
of 27.9% may be lower than some publicly-traded telecommunications carriers, Securus’s audited
financial statements provide no detail on how much the company pays to its parent, Platinum
Equity, in monitoring fees. This is a critical piece of information, since monitoring fees can be
sizeable amounts that are arguably equity dividends disguised as expenses. See Eileen
Appelbaum & Rosemary Batt, “Fees, Fees, and More Fees: How Private Equity Abuses Its
Limited Partners and U.S. Taxpayers,” Ctr. for Econ. & Policy Research (May 2016), at 26-29.
85 W.S. Gilbert, H.M.S. Pinafore, or The Lass That Loved A Sailor (1878).
86 Pub. L. 104-104, 110 Stat. 56 (1996); see Raher, supra note 45, at 231.
87 47 U.S.C. § 276(b)(1) and (d).

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aim at a handful of states that had set caps on intrastate calling rates in prisons
and jails. In 1996, a coalition of ICS carriers petitioned the FCC to preempt
state regulation of intrastate ICS rates, citing the newly enacted § 276. 88 Not
only did the FCC decline this request, but incarcerated people and their families
went on the offensive, filing the landmark class action Wright v. Corrections
Corporation of America in federal court in 2000, challenging the rates charged
for phone calls from certain privately operated prisons. 89 The district court
referred the matter to the FCC under the doctrine of primary jurisdiction, 90 but
the Commission took no immediate action. Finally, after nearly a decade of
inaction, the FCC issued a notice of proposed rulemaking in 2012. 91
When the FCC issued interim rate caps as part of the Wright
rulemaking, it required ICS carriers to submit detailed accounting data
itemizing the functional expenses of providing service to incarcerated
customers. 92 At the outset of the rulemaking, the Commission had discovered
rates ranging up to $1.15 per minute. 93 Upon reviewing the expense data
collected under the interim rule, the FCC concluded in 2015 that permanent rate
caps of 11¢ per minute would allow ICS providers to cover their costs and be
fairly compensated. 94 The final 2015 rules also allowed the imposition of some
ancillary fees in addition to the per-minute rate, but the type and amount of
such fees were strictly limited, in an effort to restrain the carriers’ “ability and
incentive to continue to increase such charges unchecked by competitive
forces.” 95 Importantly, even though the rate caps lowered the per-minute
revenues collected by carriers, the new rates allowed customers to place more
calls, thereby offsetting lower per-call profit margins. In mid-2015, Securus
told potential investors in a private briefing that the interim caps had “neutral to
. . . modestly positive EBITDA impact including some positive elasticity of
demand,” and the company expected the same result under the yet-to-be-issued
final rate caps. 96

88

Raher, supra note 45, at 232-233.
Complaint, Wright v. Corr. Corp. of Am., No. 00-cv-293-GK (D.D.C. Feb. 16, 2000), ECF No. 1.
90 Wright v. Corr. Corp. of Am., No. 00-cv-293-GK (D.D.C. Aug. 22, 2001), ECF No. 94 (order
dismissing case under the doctrine of primary jurisdiction); id., ECF No. 105 (order modifying
order of dismissal, and staying case pending FCC rulemaking); see also infra note 227 and
accompanying text.
91 78 Fed. Reg. 4369 (Jan. 22, 2013).
92 First Report & Order, supra note 32, ¶¶ 124-126, 28 FCC Rcd. at 14171-72.
93 Id. ¶ 35, 28 FCC Rec. at 14126.
94 Second Report & Order, supra note 34, at ¶ 58, 30 FCC Rcd. at 12792 (The FCC imposed an
11¢-per-minute rate cap on calls from prisons, while using a three-tiered system of higher perminute rates for calls from jails (varying based on facility population). In justifying the rate caps,
the FCC stated that even the lowest rate cap of 11¢ “is greater than the average per minute cost of
each of the more efficient reporting providers.”).
95 Id. ¶¶ 144-147, 30 FCC Rcd. at 12838-40.
96 Securus Technologies, Inc., “Public Lender Presentation” at 25 (Apr. 15, 2015), published as
appx. 1 to Comments of Prison Policy Initiative, In the Matter of Rates for Interstate Inmate
Calling Services, WC Docket No. 12-375 (Mar. 10, 2016), available at
https://www.fcc.gov/ecfs/filing/60001498735 (discussing the increasing use of bundled contracts
by large ICS carriers).
89

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Once the FCC signaled its intent to regulate calling rates, ICS
companies focused on identifying new unregulated sources of revenue. 97 New
communications channels and computer tablets offer ICS carriers numerous
opportunities to charge inflated prices and collect the resulting profits.
Electronic messaging systems charge rates from 5¢ to $1.25 per message,
although most facilities tend to set rates around 50¢. 98 Messages sent on these
systems are text-only, and subject to character limits, ranging from 1,500 to
6,000 characters. 99 Some systems allow users to attach photos or videos, or
send e-cards, but these features
inevitably cost extra.
Why should a plain-text
message cost 50¢ per message
when email is free to practically
everyone outside of prison?
Vendors typically argue that there
are costs to running the system.
Setting aside the question of
whether these costs should be
borne by incarcerated people and
their families, there is no
compelling evidence to suggest
Figure 2. Example of JPay Electronic Message Pricing
that end-user prices are reasonably Source: https://www.jpay.com/Facility-Details/Coloradorelated to vendor costs. Messaging State-Prison-System/Arkansas-Valley-CorrectionalFacility.aspx
prices typically hover around the
cost of a first-class postage stamp (JPay even goes so far as to denominate its
prices in numbers of “stamps” – see Figure 2), yet postal rates are set to cover
the costs of a universal system of delivering mail to every address in the
country—an expense structure totally unrelated to the cost of running a closed
proprietary text messaging platform. 100
Inflated prices are also evident in sales of electronic music or books.
Under a 2016 contract with the Colorado Department of Corrections (since
cancelled), GTL was allowed to charge up to $19.99 per month for a digital
music subscription. 101 This price, which is twice the rate for free-world
services like Spotify or Google Play, is even less justifiable when one considers
that GTL’s music catalog appears to be about one-tenth the size of Spotify or
Apple. 102 In 2014, the Pennsylvania Department of Corrections awarded a
contract to GTL to operate a tablet program, including an e-book feature. After
the program started, the Department attempted to prohibit people from

97

See infra text accompanying note 217.
Raher, supra note 40, at 13-14.
99 Id. at 20.
100 Raher, supra note 40, at 14-15.
101 See generally, Stephen Raher, “The Wireless Prison: How Colorado’s Tablet Computer
Program Misses Opportunities and Monetizes the Poor,” Prison Policy Initiative Blog (Jul. 6,
2017), https://www.prisonpolicy.org/blog/2017/07/06/tablets/.
102 Id.
98

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receiving purchased or donated books from any other source. 103 Although the
book ban was quickly repealed, 104 the e-book program is still in place, with
prices that consistently exceed free-world prices by a wide margin. The
Pennsylvania program does not provide free tablets, so a customer must first
purchase a tablet for $147 plus tax. 105 After that substantial outlay, a tablet user
must still purchase e-books from a list of roughly 8,800 titles. 106 The author’s
analysis of fifty randomly selected titles indicates that GTL charges $3-6 for
public-domain titles that are available for free as Kindle e-books on
Amazon.com; remaining titles are priced at an average rate of 130% over the
Kindle price.107
Non-cost-based pricing also appears when examining prices for
“premium” add-ons. For example, Securus charges one “stamp” to send a textonly electronic message. 108 Before sending a message, a non-incarcerated user
must decide whether to prepay (one additional stamp) for the recipient’s reply
(if no reply is sent, then this additional amount is simply wasted). The nonincarcerated user may also attach up to five photographs, for an additional
stamp. Assuming Securus is economically rational, the typical 50¢ base price
for a text-only message would be adequate to cover the overhead of operating
the electronic messaging network. Thus, the marginal cost of adding photos to
a message would consist of the additional storage capacity necessary to store
the additional files. Assuming that a customer attaches the maximum five
photographs, at the maximum allowed size (3 megabytes per photo), this would
require Securus to store 15 megabytes of data, which entails storage costs of
less than one-tenth of a cent. 109 Even if one were to add some additional
amount to allow Securus to recoup the cost of developing or licensing the
software to receive and transmit such digital files, it is hard to imagine a
103 Wanda Bertram, “Philadelphia Inquirer exposes Pennsylvania’s complicity in cutting off
incarcerated people’s access to books,” Prison Policy Initiative Blog (Sept. 21, 2018),
https://www.prisonpolicy.org/blog/2018/09/21/pennsylvania-ebooks/.
104 Samantha Malamed, “Under Pressure, Pa. Prisons Repeal Restrictive Book Policy,”
Philadelphia Inquirer (Nov. 2, 2018), http://www.philly.com/philly/news/pennsylvania-bookban-doc-books-through-bars-wetzel-20181102.html.
105 Penn. Dept. of Corr., “Tablets,” https://www.cor.pa.gov/Inmates/Pages/Tablets.aspx (accessed
Nov. 29, 2018).
106 “GTL E-book Availability List,” https://www.cor.pa.gov/Inmates/Documents/master-ebooklist.pdf (accessed Nov. 29, 2018).
107 Using a randomized process, the author selected fifty titles from the GTL e-book list and
searched for Kindle versions on Amazon.com. Four titles were discarded from the sample
because they were not available on Amazon, and an additional title was discarded because it
existed in multiple editions. Of the forty-five titles that are available from both sources, eight are
public domain works which are available for free on Amazon, but for which GTL charges $2.99
(three titles) or $5.99 (four titles). The remaining thirty-seven works were available for an
average price of $9.40 from Amazon versus an average of $17.15 from GTL. GTL’s prices
exceeded Amazon’s by an average of 130%, ranging from a low premium of 30% ($20.99 for a
book sold on Amazon for $15.99) to a high of 808% ($8.99 for a book sold on Amazon for 99¢).
108 Securus Technologies, “eMessaging,” https://securustech.net/emessaging (accessed Jan. 3,
2019).
109 Pricing information was obtained from Andy Klein, “Hard Drive Cost Per Gigabyte,”
https://www.backblaze.com/blog/hard-drive-cost-per-gigabyte/ (Jul. 11, 2017), which quotes
pricing from Seagate of $49.99 for a 1 terabyte drive, yielding a cost of 5¢ per gigabyte. Given
the maximum attachment size of 15 MB (or 0.015 GB), Securus’s approximate marginal cost is
calculated as follows: 5¢ x 0.015GB = 0.075¢.

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situation where such recovery would justify charging 50¢ to send five digital
photos. But in facilities that have implemented mandatory mail-scanning
policies, 110 such electronic systems are the only way for families and friends to
share pictures with incarcerated correspondents.
Sometimes vendors are able to charge customers premium prices for
the privilege of avoiding problems that are created by the vendor itself. For
example, Securus provides video visitation and electronic messaging in the
Knox County, Tennessee jail, but customers often complain about having to
wait in line for a fifteen minute session at a kiosk in a crowded unit. To avoid
the hassle and lack of privacy that comes with using a shared kiosk, customers
can access the same features on an individual tablet, for which they must pay
$4.99 per day plus regular messaging fees. 111
In addition to prices that are unjustly high, consumers are also
confronted by confusing or inefficient payment options which can hinder
informed decision-making. To begin, the number of potential payment options
can be bewildering, because vendors often encourage customers to make
advance payments for specific types of services. But even if one vendor
operates a facility’s phone system and electronic messaging system,
prepayment for one type of communication often cannot be later redirected to a
Figure 3. Payment Options - Colorado DOC
AdvancePay Phone:
customer prepays for
collect calls from
incarcerated relative.
PIN Debit: customer
prepays for debit calls
from incarcerated relative.
Family member visits
connectnetwork.com, and
choses Colorado DOC,
which provides four
available services:

Messaging: customer
prepays for electronic
messages to and from
incarcerated relative.
Debit Link: customer buys
“points” that incarcerated
relative can then spend on
certain digital content.

There is a fifth option, not
linked from the main
Colorado DOC page.

Trust Fund: customer
transfers money to
incarcerated person’s trust
account.

$3 flat fee (was $7.95
before 2015 FCC rule)

$3 flat fee (was $7.95
before 2015 FCC rule)

Fees unknown

Tiered fee of $2 to $6,
(fee equals 2% to 17%
of purchase, depending
on amount).

Tiered fee of $2.75 to
$7.75 (fee equals 2% to
23% of transfer,
depending on amount).

Credits can only be used to receive
collect calls from a specific individual.
Unspent funds are refundable when
incarcerated customer is released.
Credits can only be used by recipient to
make phone calls. Unspent funds are
refundable when customer is released.
Credits can only be used to send and
receive messages to/from an
incarcerated person. Refund provisions
unclear.
One dollar = 100 “Link Units,” which
incarcerated person can spend on music,
games and “other products and services”
(but not phone calls). No refunds.

Money is collected by GTL and
transferred to a pooled account held by
DOC. Funds can be used for any lawful
purpose. Unspent balance is refunded
upon account-holder’s release.

Source: Stephen Raher, “The Wireless Prison: How Colorado’s Tablet Computer Program Misses
Opportunities and Monetizes the Poor,” Prison Policy Initiative Blog (Jul. 6, 2017),
https://www.prisonpolicy.org/blog/2017/07/06/tablets/.

different service offered by the same vendor. For example, depending on the
type of service someone is seeking to purchase, a relative of someone in the
Colorado prison system must choose between five different payment options,
which differ in terms of transaction fees and refund provisions (see Figure 3).
110
111

See supra note 42.
Lakin, supra note 78.

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Even if a consumer can
decipher payment options, the
associated terms can make it nearly
impossible to determine what payment
method is the most economically
rational. To the extent that processing
fees are high, one might assume that
making fewer prepayments in larger
amounts is the most rational course.
But this type of prepayment can be
disadvantageous when vendor terms
and conditions provide for forfeiture of
prepaid amounts in various situations.
Figure 4. Typical JPay fee schedule
For example, Securus—like all
Source: https://www.jpay.com/PAvail.aspx
electronic messaging providers—
requires prepayment for messages. Not only are such prepayments nonrefundable, but they also expire 180 days after the date of purchase.112 Given
that people in prison can lose access to electronic messaging as a disciplinary
measure, it is not hard to imagine situations where family members could
prepay for a large quantity of electronic messages, only to lose the money when
their relative is subject to disciplinary sanctions. Securus allows refunds for
video visitation sessions in some limited circumstances, 113 but the refund is
only issued in the form of an account credit, which itself expires after 90
days. 114 Anecdotal evidence also indicates that prepayment forfeiture can be a
problem when a correctional facility changes ICS carriers without a provision
for transfer of prepaid balances.
Even if prepayment methods are not particularly confusing, they can
nonetheless be unfair or inefficient if, for example, a prepaid account can only
be used to call a specific phone number. GTL’s most common payment
method is the “Advance Pay” system, which allows outside payers to prefund
phone calls from incarcerated friends or family. Yet the Advance Pay
“account” can only be used to place calls to one specific telephone number.115
Thus, an incarcerated customer who wants to use Advance Pay to call two
different relatives (or one relative who happens to use two different phone
numbers), would have to establish two different prepaid accounts.
Finally, fees charged for sending money to a trust account are reliably
high, without any readily apparent cost-based justification. Neither Access
Corrections nor TouchPay (owned by GTL) publish their fees, but JPay
routinely charges fees that equate to 20-35% for smaller deposits (Figure 4).
When a plaintiff incarcerated in Kansas challenged deposit fees, that state’s

112

Securus Technologies, Inc., “Friends and Family Terms and Conditions” (dated Oct. 19, 2018)
[hereinafter “Securus T&C”], Emessaging Terms §§ 6 and 9,
https://securustech.net/web/securus/terms-and-conditions (accessed Nov. 30, 2018, and archived
at http://www.webcitation.org/74KHOK53W).
113 See infra, notes 127-129 and accompanying text.
114 Securus T&C, supra note 112, Secure Video Visitation Service Terms.
115 James v. Global Tel*Link, No. 13-cv-4989, 2018 WL 3727371, *10 (D.N.J. Aug. 6, 2018).

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supreme court noted that the plaintiff’s mother incurred monthly fees of $11.40
to deposit $45 into his trust account (a 25% markup). 116
Prison-retail vendors price their products as if they are selling cream,
when in fact they are trafficking in skim milk. In normal markets, such
behavior is mitigated by competition and consumer choice, but not so inside
prison walls.
B. What Law Applies?
When evaluating the rights and remedies of a party to a commercial
transaction, the first task is to determine what law applies. In the case of prison
retailing, this poses some unique challenges. To begin, a frequent hurdle facing
incarcerated people who seek to vindicate contractual rights is determining the
text of the contract. The terms of more and more consumer contracts are
available exclusively online. To the extent that a contract is exclusively
available on the internet, an incarcerated customer is simply unable to access
the document; 117 on the other hand, if the customer agrees to “browser wrap”
terms and conditions displayed on a kiosk or tablet, he may well be unable to
save, study, or share this text with a friend or advisor, for lack of email or a
printer. Incarcerated people also face challenges that are familiar to many freeworld consumers, such as dense terms written in impossibly small print. In
fact, when formerly incarcerated people in Georgia filed a class action
complaint challenging the legality of release cards, the court declined to rule on
the enforceability of the cardholder agreement until the card-issuer filed a
reformatted version in typeface that was large enough for the court to read.118
Once a customer determines the terms of the contract governing a
purchase, the next analytical step is to compare the provisions of the consumerfacing contract to the terms of the contract between the vendor and the
correctional facility. The facility-vendor contract often contains more detail
and is typically a negotiated agreement, in contrast to the adhesive terms
presented to end users on a take-it-or-leave-it basis. In a typical
telecommunications contract, for example, Securus warrants to a county jail
that its delivery of video visitation service will be performed in a good and
workmanlike manner. 119 In sharp contrast, family members signing up to use
Securus’s video visitation product are required to assent to terms and conditions
that purport to disclaim all warranties, express, implied, or statutory. 120
116

Matson v. Kan. Dept. of Corr., 301 Kan. 654, 659-660 (2015) (
See supra note 67 and accompanying text.
118 Regan v. Stored Value Cards, No. 14-cv-1187-AT, ECF No. ___ (order directing defendants
to file a reformatted or retyped version of the cardholder agreement in 13-point font) (N.D. Ga.
May 29, 2014).
119 E.g., Master Services Agreement between Securus Technologies, Inc. and Fort Bend County
(Texas) (dated Feb. 6, 2018), Exh. C. at 16 (on file with author) (“[Securus] warrants that the
services it provides as contemplated by this Schedule [including video visitation] will be
performed in a good and workmanlike manner consistent with industry standards and
practices.”).
120 Securus T&C, supra note 112, General Terms § 8(A) (service “is provided on an ‘as is’ and
‘as available’ basis. Securus and its suppliers, licensors, and other related parties, and their
respective officers, agents, representatives, and employees expressly disclaim all warranties of
any kind, whether express, statutory or implied, including, but not limited to, the implied
117

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Although such discrepancies serve to illustrate unfair practices on the part of
the vendors who draft adhesive consumer contracts, it is unlikely that customers
can directly avail themselves of the provisions in the vendor-facility contract.
Not only do vendor-facility contracts invariably contain express disclaimers of
third-party beneficiaries, but common law doctrine is particularly hostile to
third-party beneficiary status in the context of government contracts. 121 There
is, however, a possibility that unreasonable discrepancies between a vendorfacility contract and an end-user contract could form the basis for a UDAP
claim. 122
Finally, in the telecommunications context, it is important to determine
whether a given service is covered by a publicly-filed tariff. Telecom providers
often use tariffs to defend against rate litigation, by invoking the filed-rate
doctrine. 123 But the possibility remains that end-users may sometimes be able
to use the doctrine offensively. Because website terms and conditions are so
exculpatory, 124 a tariff reviewed and approved by a regulatory may well provide
greater customer relief by, for example, allowing claims based on the carrier’s
gross negligence, willful neglect, or willful misconduct. Under the filed-rate
doctrine, the terms in the tariff would be binding, because a carrier cannot
“employ or enforce any classifications, regulations, or practices . . . except as
specified in [a filed tariff].” 125
C. Terms of Service: Carrying a Bad Joke Too Far 126
As alluded to in the previous section, terms and conditions thrust onto
prison-retail consumers are unfairly one-sided. While contracts of adhesion
have become commonplace in consumer transactions, the extremity of some
prison-retail terms of service raise questions about what, if anything, a
customer is actually purchasing. The terms for Securus’s video visitation
product begin with a cheerful declaration that the service “allows users to avoid
the time, expense and hassle of travelling to and from a correctional facility,”
but a subsequent provision specifies that “Securus makes no representations or
guarantees about the ability of the service to work properly, completely, or at
all.” 127 All fees are “pre-paid and non-refundable,” but Securus will, in “limited
situations,” consider issuing a discretionary refund, although it will not issue
refunds “for disconnects initiated by the correctional facility, or disconnects due
to Internet connection or hardware malfunctions.” 128 Indeed, the same policy
warranties of merchantability, fitness for a particular purpose, title, accuracy of data and noninfringement” (emphasis deleted)).
121 Restatement (Second) of Contracts § 313 (1981).
122 See infra § IV.C.
123 See infra notes 228-239 and accompanying text.
124 See infra § III.C.
125 Am. Tel. & Tel. Co. v. Central Ofc. Tel., 524 U.S. 214, 221-222 (1998).
126 The title of this section is admiringly borrowed from Peter Alces and Jason Hopkins’
masterful analysis of U.C.C. § 4-103(a), Carrying A Good Joke Too Far, 83 Chicago-Kent L.
Rev. 879 (2008).
127 Securus T&C, supra note 112, Prod. Terms & Conditions § 6 and Gen’l Terms & Conditions
§ 9.
128 Id., Prod. Terms & Conditions § 6.

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states that discretionary refunds will only be issued in situations where
“Securus cancels a paid Video Visitation session before the session begins,” 129
which indicates that the company’s policy is to never issue a refund for a
disconnected session, even if the disconnect was caused by a failure of
Securus’s own network.
Unsurprisingly, mandatory arbitration provisions and class-action
prohibitions are ubiquitous in prison retail terms. GTL includes a broad
arbitration and class-action ban in its terms, although it fails to identify an
arbitral forum, 130 thus raising questions about enforceability. JPay publishes
separate terms and conditions for its various services and computer hardware,
all of which provide for mandatory arbitration before JAMS. 131 Although
prison retailers are not always successful in enforcing arbitration agreements,
the industry (like others) presumably learns from its missteps and engages in
ongoing efforts to fashion more ironclad contractual provisions. 132 The major
failure in terms of arbitration provisions has been release cards, because courts
have largely found that cardholders were given no other way to obtain their
money, and therefore any agreement to arbitrate was not voluntary. 133
As computer tablets become more prevalent inside correctional
facilities, so too does the relevance of consumer warranty law. Prison retailers’
contractual terms governing the sales of goods are replete with questionable
provisions. The most noticeable problem is the appallingly short warranty
periods covering expensive computer tablets. JPay tablets can cost up to
$160, 134 but the devices are “not warranted to operate without failure” and are
covered only by a warranty against “material defects in design and
manufacture” lasting ninety days from the first time of use.135 Commissary
company Union Supply sells tablets in the California state prison system.
Although Union Supply’s warranty period is nominally 180 days, any warranty
claims made after the ninetieth day require payment of a $50 “non-refundable
administrative and processing fee” (an amount equal to nearly one-third of the
device’s purchase price).136 The Union Supply contract further makes the

129

Id. (emphasis added).
GTL T&C, supra note Error! Bookmark not defined. § R.
131 E.g., JPay, Inc., “Payments Terms of Service,”
https://www.jpay.com/LegalAgreementsOut.aspx (accessed Dec. 6, 2018).
132 For example, GTL lost a motion to compel arbitration as to most of the named plaintiffs in a
New Jersey class action because most of the plaintiffs had created their accounts through GTL’s
automated interactive voice recognition system, and had not taken any affirmative steps to
demonstrate acceptance of the arbitration provision. James v. Global Tel*Link Corp, et al., No.
13-4989, 2016 WL 589676, at *4-7 (Feb. 11, 2016).
133 See infra notes 296-297 and accompanying text.
134 Victoria Law, “Captive Audience: How Companies Make Millions Charging Prisoners to
Send an Email,” Wired (Aug. 3, 2018), https://www.wired.com/story/jpay-securus-prison-emailcharging-millions/ (citing prices ranging from $40 to $160, depending on the prison system).
135 JPay Inc., “Player Purchase Terms and Conditions and Warranty Policy” (dated Dec. 5, 2017)
https://www.jpay.com/LegalAgreementsOut.aspx) (accessed Dec. 6, 2018).
136 Union Supply Group, Inc., “Rules and Regulations,”
https://californiainmatepackage.com/Catalog/MenuCatalogPages/ManageStaticPage.aspx?pageid
=Rules (accessed Dec. 6, 2018). Union Supply does not publicly reveal prices, but other sources
have reported that the tablets cost $159 when the program was introduced. Malik Harris, “New
130

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dubious claim that tablets are “customized” goods and therefore buyers may not
obtain a refund under any circumstances (even if a buyer mistakenly purchases
a tablet for someone housed in a facility that does not allow tablets) 137—a
provision that is likely unenforceable as an unreasonable restriction on a
buyer’s right to inspect and reject purchased goods. 138
In summary, the terms and conditions propagated by prison retailers
serve as a concrete reminder that no one is protecting the interests of consumers
in this sector. Correctional procurement staff appear to be entirely uninterested
in what terms are imposed on consumers. Left to their own devices, vendors
draft terms that are so one-sided it is difficult to call them contracts. While
some onerous provisions may well be unenforceable under applicable consumer
protection statutes, customers are left to figure out this legal puzzle on their
own; and, of course, a customer’s ability to exercise their legal rights may be
hindered or extinguished entirely given the frequent use of arbitration
provisions and class adjudication prohibitions.
D. Advertising, Consumer Perceptions, and Behavioral Economics
Incarceration, for many people, is a prolonged, slow-motion disruption
of normal life, punctuated by periods of unpredictable violence. Certain aspects
of incarceration can be analogized to being trapped in a natural disaster: you are
cut off from loved ones, physical harm is a constant threat, and the future is full
of unknowns. Many areas of the law provide special protection for people who
must procure critical goods or services in stressful situations: price-gouging
statutes prevent unfair fuel pricing in a natural disaster, 139 the Federal Trade
Commission prohibits exploitation of grieving relatives purchasing funeral
services, 140 and countless occupations (from hearing aid salespeople 141 to
pawnbrokers 142) are subject to wide-ranging regulatory systems designed to
protect consumers whose ability to pursue the best bargain may be impaired. In
the case of prison retailing, however, there is a dramatic lack of structural
safeguards against exploitation.

Policy Allows Prisoner to Purchase Tablets,” San Quentin News (Jan. 1, 2016),
https://sanquentinnews.com/new-policy-allows-prisoner-to-purchase-tablets/.
137 Id. The claim of custom-made status is based on the fact that Union Supply asks purchasers to
select electronic content during the purchase process, and that content is then installed on the
device that is shipped. The legal relevance of this so-called customization is unclear. As a
practical matter, the content loading does not have any impact on the seller’s ability to re-sell the
device, because—according to Union Supply’s own terms of service—content is loaded onto a
removable SD card.
138 See Uniform Commercial Code §§ 2-513 (buyer’s right to inspect tendered goods) and 2-601
(buyer’s rights on improper delivery). See also U.C.C. § 2-719(1) and cmt. 1 (parties may
contractually modify remedial provisions of U.C.C. Article 2, but “they must accept the legal
consequence that there be at least a fair quantum of remedy for breach of the obligations or duties
outlined in the contract.”).
139 Nat’l Consumer Law Ctr., Unfair and Deceptive Acts & Practices § 4.3.11.2 (9th ed. 2016).
140 16 C.F.R., pt. 453.
141 John C. Williams, Annotation, Validity and Construction of State Statutes Regulating Hearing
Aid Fitting or Sales, 96 A.L.R.3d 1030 (1979).
142 Tracy Bateman Farrell, Validity of Statutes, Ordinances, and Regulations Governing Pawn
Shops, 16 A.L.R.6th 219 (2006).

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Meanwhile, prison retail companies (likely motivated by dual desires to
increase sales and disguise the greed that shapes their business models) use
advertising to portray themselves as caring providers who hold the precious
keys to comfort (commissary items), normalcy (communication with family
members), or post-incarceration survival (educational opportunities). Given the
monopoly position enjoyed by most prison retailers, it can be difficult to
imagine why these companies would spend money on consumer-facing ads,
except to manipulate consumer opinion in a manner that boosts sales. The
industry’s advertising practices raise questions about the unchecked power—
both persuasive and coercive—of prison retail vendors.
The simplest type of misleading advertising is a mere promise of hope
based on incomplete facts. For example, non-incarcerated customers who want
to send money or an electronic message through JPay must go to the company’s
homepage, where a prominent banner ad cycles through various messages
immediately next to the sign-up form. One such message (Figure 5) tells

Figure 5. JPay website advertisement. Source: www.jpay.com.

customers that “your loved one can access education platforms” via the JPay
tablet. The reference to “educational platforms,” accompanied by images of the
formal trappings of academia, evokes thoughts of intellectual engagement and
increased earning potential. In actuality, the platforms referenced in the ad
consist of “KA Lite” and “JPay’s Lantern.” The ad does not mention the
limitations of the two platforms. KA Lite is a collection of open-source videos
that JPay has acquired, presumably for free, and makes available for “selfguided learning.” 143 Lantern, meanwhile, is not a universal education program,
but is simply a platform that each facility can choose to utilize or not. 144 While
JPay has clearly invested in a slick marketing campaign, it does not appear to
adequately disclose the limitations of its product.

143

JPay, supra note 76.
See supra notes 76-77 and accompanying text. JPay’s education page claims that “Tens of
thousands of incarcerated students have earned college credits, studied for their GEDs, and
participated in other educational activities through JPay’s Lantern.” JPay, supra note 76. The
lack of details raises immediate questions about the meaning of this claim, along with the vast
difference between earning college credit and “participating in other educational activities.”
144

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A series of advertisements by Securus illustrate how marketing can
raise concerns about consumer privacy. The campaign, which uses the tag-line
“Connecting to what matters,” features extensive excerpts from what appear to
be actual video visitation sessions with incarcerated fathers and their minor
children. 145 The videos use unsettling intimate footage, featuring men using

Figure 6. Images from Securus’s advertisement “Be There,” available at
https://www.ispot.tv/ad/Axgw/securus-technologies-video-visitation-celebrating-christmas
Author’s note: Using this ad image presents an ethical challenge. On the one hand, an image is
worth the proverbial thousand words. On the other hand, it is awkward to criticize the
exploitation of families and then use a screenshot of a child who may not have consented to
the use of his likeness. In the end, I have erred on the side of transparency, but not without
second thoughts.

video visitation to see their children engaged in normal childhood activity like
homework or celebrating holidays (see Figure 6). It is not clear whether the
people in the ads are actors or actual customers, but given the lack of a
disclaimer, one would assume the footage depicts actual users. 146 Even though
Securus’s privacy policy warns customers that they should have no expectation
of privacy, the policy only speaks of call content being used for law

145

“Connected,” https://www.ispot.tv/ad/AXF1/securus-technologies-connected (2016);
“Homework,” https://www.ispot.tv/ad/AxS1/securus-technologies-homework (2016).
146 The FTC’s advertising endorsement rules require disclosure when actors are used to portray
customers. 16 C.F.R. § 255.2(c) (“Advertisements presenting endorsements by what are
represented, directly or by implication, to be ‘actual consumers’ should utilize actual consumers .
. . or clearly and conspicuously disclose that the persons in such advertisements are not actual
consumers of the advertised product.”). Although the consumers in the Securus ads do not make
any express statements concerning the video visitation product, their presence in the
advertisements still constitutes an “endorsement” under the FTC’s expansive definition. See 16
C.F.R. § 255.0(b) and example 5.

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enforcement purposes, with no mention of marketing activities. 147 To the
extent that the individuals in the videos are not actual customers, then the lack
of a disclaimer likely constitutes a deceptive advertising practice, since their
reactions do not accurately reflect those of real users. Alternatively, to the
extent that the ads do depict actual customers, one wonders whether the
customers were compensated for use of their images, and if so, what they
received? Was separate compensation paid to the children in the ads, and were
non-incarcerated parents consulted? Even if Securus complied with all
applicable laws, the use of children in these ads evidences a disturbing
willingness to disregard customer privacy and exploit the very personal pain
that children of incarcerated parents frequently experience. 148
Not all deceptive marketing practices involve advertising. Free-world
users of JPay, for example, may receive automated emails identified as coming
from a specific incarcerated correspondent
(Figure 7). The message, written in the first
person, states “I wanted to let you know that
my Media Account balance is running low. . . .
Your support is appreciated, and it’s really
easy to fund my Media Account.” Money
transfer instructions then follow. Only at the
end of the message is there a disclaimer
(partially cut off on an iPhone 6, which has a
healthy screen height of 5.43 inches) stating
“This email was sent by JPay on behalf of your
loved one.”
The danger of marketing
communications in the prison-retail setting is
that no one appears to monitor the contents for
accuracy and fairness. In many markets,
deceptive advertising can be identified and
addressed by competitors But in prison,
marketing can mislead and manipulate family
members—eager to help an incarcerated
relative—into buying overpriced products
based on an unchecked misperception that a
Figure 7. Automated JPay account funding
certain product or service represents the key to message
rehabilitation.

147

See infra notes 152-153 and accompanying text.
See Justice Strategies, Children on the Outside: Voicing the Pain and Human Costs of
Parental Incarceration 5 (2011) (“Unlike children of the deceased or divorced who tend to
benefit from society’s familiarity with and acceptance of their loss, children of the incarcerated
too often grow up and grieve under a cloud of low expectations and amidst a swirling set of
assumptions that they will fail, that they will themselves resort to a life of crime or that they too
will succumb to a life of drug addiction.”).
148

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E. Data Insecurity
Given the large amounts of data that prison retailers (particularly ICS
carriers) collect from customers, data privacy should be front and center in
policy debates about the rights of the incarcerated. Instead, such issues are
rarely discussed and are governed by vague provisions buried in one-sided
privacy policies. The reach of “big data” should be of particular concern to
anyone with direct or even indirect involvement in the justice system, because
of the numerous ways in which police, courts, probation systems, and
correctional facilities are using data to make decisions about individuals’ lives.
The danger of poorly-planned algorithms is that they can shape policing
strategies, investigative outcomes, and sentencing decisions in ways that too
often penalize people either for being poor or for maintaining relationships with
people who have criminal records. By collecting more data to feed into such
uncritical systems, ICS carriers play an active role in justifying a deeply flawed
status quo. 149
ICS carriers collect a wealth of information about customers, which
comes from at least four sources. First, companies hold payment data, both in
the form of payment-card information and transaction histories. Second, some
services require a non-incarcerated user to verify their identity by uploading
copies of government identification documents. 150 Third, carriers record and
store the actual content of communications (phone calls, written messages, or
video chats) which are transmitted on their platforms. 151 Finally, some carriers
collect geolocation information from cell-phone users.
People who communicate with incarcerated friends or relatives are
typically advised by an automated system that their communications will be
monitored, yet the nature and extent of such monitoring is neither transparent
nor intuitive. Take Securus’s privacy policy regarding its video visitation
product, which states that users must consent to call data being “accessed,
reviewed, analyzed, searched, scrutinized, rendered searchable, compiled,
assembled, accumulated, stored, used, licensed, sublicensed, assigned, sold
transferred and distributed” by “Law Enforcement.” 152 Someone
communicating with a relative in the California prison system may reasonably
expect the reference to “law enforcement” to refer to the California state prison
system and probably the state police. Instead, the defined term in Securus’s
contract is much broader—law enforcement is defined as “personnel involved
149

Cathy O’Neil, Weapons of Math Destruction: How Big Data Increases Inequality and
Threatens Democracy 98 (2016) (Prison systems “[a]ll too often . . . use data to justify the
workings of the system but not to question or improve the system.”).
150 Securus’s video visitation system, for example, directs users to upload “a copy of your
government issued photo ID and a photo of yourself” when creating an account.
151 In addition to communications that are actually initiated on a specific network, vendors can
also end up capturing and storing communications that were initially sent as private
communications through the U.S. mail, when facilities hire contractors to scan and reprint
incoming mail. See supra, note 42. Attorneys have expressed particular concern about such
systems, which can effectively destroy a lawyer’s ability to securely and confidentially
communicate with incarcerated clients. See Zuri Davis, “Pennsylvania’s New $4 Million Prison
Mail System Brings Privacy Concerns,” Hit & Run Blog (Oct. 10, 2018),
https://reason.com/blog/2018/10/10/pennsylvanias-4-million-prison-mail-scan.
152 Securus T&C, supra note 112, Privacy Policy § II(J).

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in the correctional industry (federal, state, county and local), investigative
(public and private), penological or public safety purposes and specifically
including the Department of Homeland Security and any other anti-terrorist
agency (federal, state and local).” 153 The reason for this broad (if
grammatically fractured) definition is that Securus offers its law enforcement
customers a product marketed under the name “Threads.” 154 Threads
aggregates data from correctional facilities throughout the country and shares it
with other participating facilities.155 Securus markets Threads by proclaiming
that “digital evidence is everywhere.”
Securus’s unquenchable thirst for data does not seem to be
accompanied by a commitment to protect customers’ privacy. In 2014, hackers
obtained call records and access to call recordings for over 70 million phone
calls on the Securus system, including privileged calls between clients and
attorneys. The details of the data breach were revealed in press reports in
November 2015. 156
Securus has also been exposed for improperly recording privileged
attorney-client conversations. Following a 2016 federal indictment in Kansas,
concerning illegal activity in a privately operated federal correctional facility,
defense attorneys discovered that the U.S. Attorney had obtained recordings of
privileged phone calls made by their clients. 157 The district court appointed a
special master to investigate the extent of improper recording and the U.S.
Attorney’s use of such evidence. 158 In an interim report, the master reported
that even when prison staff properly designated a phone number as belonging to
an attorney, Securus’s system nonetheless recorded such calls to such numbers
on numerous occasions, and the recordings had been accessed by law
enforcement dozens of times. 159 In response, the court ordered further
investigation, which has become mired in litigation since the U.S. Department
of Justice ceased cooperating with the special master. 160
153

Id. (emphasis added).
Securus’s marketing materials and contracts actually refer to the product as “THREADS™.”
For ease of readability, and because the name does not appear to be an acronym, it is referred to
here with the more reader-friendly capitalization “Threads.” Securus describes Threads as
“[s]ystems that merge big data, voice biometrics, and pattern identification, providing early
detection and alerts for investigators, attorneys, courts and criminal justice systems.” Securus
Technologies, Inc., Response to Request for Proposals RFP 18-021 (Fort Bend County, Texas)
(Oct. 17, 2017), at 261 (on file with author).
155 Master Services Agreement, supra note 119, at 5 (“THREADS™ offers an optional
‘community’ feature, which allows member correctional facilities to access and analyze
corrections communications data from other correctional facilities within the community and data
imported by other community members.”).
156 Jordan Smith & Micah Lee, “Not So Securus,” The Intercept (Nov. 11, 2015),
https://theintercept.com/2015/11/11/securus-hack-prison-phone-company-exposes-thousands-ofcalls-lawyers-and-clients/.
157 U.S. v. Black, et al., No. 16-CR-20032-JAR, at 1-3 (D. Kan. Jan. 12, 2018) ECF No. ___
(memorandum and order on United States’ motion to terminate special master).
158 Id. at 5-6.
159 Report of Special Master Regarding Other Issues Related to Recordings at CCA-Leavenworth,
U.S. v. Black, et al., No. 16-CR-20032, at 20-24 (D. Kan. Mar. 16, 2017), ECF No. 214.
160 See generally, Special Master’s First Status Report Regarding Phase III Investigation, U.S. v.
Black, et al., No. 16-CR-20032 (D. Kan. Oct. 20, 2017), ECF No. 298.
154

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While the 2014 and 2016 incidents impact parties utilizing Securus’s
calling products, other incidents have implicated the privacy rights of everyone
with a cell phone, including people who have never placed or received a call
involving Securus’s network. Securus offers (or at least, offered until
recently 161) a free add-on product referred to as “location based services”
(“LBS”), which allows law-enforcement staff to obtain “a mobile device user’s
approximate geographical location.” 162 This service is not restricted to cell
phones used to make calls to people in facilities under contract with Securus.
Rather, Securus’s LBS uses data provided by the major wireless carriers, and
can provide location information for virtually any U.S. cell phone. 163 Although
agencies using LBS are supposed to ensure that they have proper authorization
(such as a warrant or court order) to obtain phone location information,
Securus’s contract with facilities disclaims any responsibility on Securus’s part
for ensuring compliance with applicable law. 164 A 2017 civil complaint
accuses a Missouri Sheriff of using “false paperwork” to improperly obtain
cell-phone information regarding law enforcement personnel in other agencies
and a state judge. 165 The plaintiffs in the Missouri case have only named the
sheriff as a defendant, and it remains unclear whether Securus could be subject
to liability for mishandling private call information, but there is a suggestion
that the FCC is conducting an enforcement investigation concerning Securus’s
use of LBS. 166
In a new privacy policy published in January 2019, GTL reveals that it
tracks the geographic location of any cell phone that receives a call on its ICS
platform, both when the call is connected and for sixty minutes afterward.
GTL’s privacy policy misleadingly states that customers can “opt out” of this
location tracking, but actually the ability to opt out is limited to the sixtyminute trailing period. The only way to opt out of location tracking entirely is
to not use GTL’s services. 167
Telecommunications companies are not the only prison retailers who
compile customer data that could be put to other unexpected uses. Correctional
banking firms amass substantial transactional data that can also form the grist
161

It is difficult to ascertain the current status of LBS services in general. After the original story
broke, the large wireless carriers made claims of increased privacy protections that now look to
have been false. See Joseph Cox, “Sprint to Stop Selling Location Data to Third Parties after
Motherboard Investigation,” Motherboard (Jan. 16, 2019),
https://motherboard.vice.com/en_us/article/qvqgnd/sprint-stop-selling-location-data-tmobile-attmicrobilt-zumigo.
162 Master Services Agreement, supra note 119, at 6.
163 Jennifer Valentino-DeVries, “Service Meant to Monitor Inmates’ Calls Could Track You,
Too,” New York Times (May 10, 2018),
https://www.nytimes.com/2018/05/10/technology/cellphone-tracking-law-enforcement.html.
164 Master Services Agreement, supra note 119, at 6.
165 Complaint, Cooper, et al. v. Hutcheson, No. 17-cv-073 (E.D. Mo. May 9, 2017), ECF No. 1.
166 Wright Petitioners’ Reply to Joint Opposition to Petition to Deny, In the Matter of Joint
Application of TKC Holdings, ICSolutions, and Securus Technologies for Grant of Authority, WC
Dkt. No. 18-193, at 6 (July 30, 2018) (“It is understood that an enforcement inquiry is underway
to determine whether Securus in fact violated Section 222 of the Act and the Commission’s rules
related thereto.”).
167 Global Tel*Link Corp., “Privacy Policy,” http://www.gtl.net/privacy-policy-en/ at ¶ 1(D)
(accessed Jan. 17, 2019).

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for law enforcement datasets. Notably, the Federal Bureau of Prisons in 2015
proposed an amendment to its commissary regulations that would have required
senders of money to consent to the Bureau’s “collection, review, use,
disclosure, and retention of, all related transactional data, including the sender’s
personal identification information.” 168 The rule would have also allowed the
same use of data by “service providers.” After advocacy groups objected to the
new rule as a violation of the Right to Financial Privacy Act (“RFPA”), 169 the
Bureau appears to have abandoned the proposal; 170 however, the RFPA
provides limited protections because it applies only to collection of
transactional information by the federal government. 171 The terms of privacy
policies impart little information about how the vendor will use customers’
financial data. For example, TouchPay (a GTL subsidiary) states that it may
share customer information with “third party . . . service[] providers who
provide services . . . on our behalf, such as . . . analyzing data.” 172 Such openended provisions provide no meaningful information on data usage, specifically
any usage that may make the vendor a data furnisher for purposes of the Fair
Credit Reporting Act. 173
Perhaps the most troublesome data-related practice by prison retailers is
a seeming unwillingness to seriously comply with most of the commonly
accepted data security frameworks. As Professor William McGeveran has
shown in his analysis of fourteen leading systems of data security, a generally
accepted legal duty of data security has begun to emerge from various sources
of public and private law. 174 As entities become more attuned to data security,
many of these accepted principles become enforceable duties through the force
of contractual agreements. 175 But with correctional administrators apparently
unconcerned about the security of prison-retail data, there does not appear to be
growing use of contractual commitments to enforce security standards, thus
leaving legislative action as the last apparent line of defense.
IV.

Potential Sources of Protection

Most problems facing consumers in the prison retail-sector can be
traced back to one fundamental shortcoming: on both the state and federal
levels, no entity has been tasked with protecting the interests of incarcerated
168

U.S. Dept. of Justice, Bureau of Prisons, Proposed Rule, Inmate Commissary Account Deposit
Procedures, 80 Fed. Reg. 38658, 38660 (Jul. 7, 2015) (proposed 28 C.F.R. § 506.3).
169 12 U.S.C. § 3401, et seq.
170 See Comments and Petition for Further Rulemaking, RIN 1120-AB56 (Sept. 1, 2015),
available at https://www.regulations.gov/contentStreamer?documentId=BOP-2015-00040003&attachmentNumber=1&contentType=pdf. Although the Bureau of Prisons has never
formally rescinded the proposed rule, it is now listed as “inactive” on the Office of Information
and Regulatory Affairs’ Fall 2018 unifed agenda of federal regulatory actions. See
https://www.reginfo.gov/public/do/eAgendaInactive.
171 12 U.S.C. §§ 3401(3), 3402.
172 TouchPay Holdings, LLC, “Privacy Statement” at ¶ 5(B)
https://www.gtlfsonlinepay.com/portal/includes/privacy.html (accessed Jan. 17, 2019).
173 See 15 U.S.C. §1681s-2.
174 William McGeveran, The Duty of Data Security 102 Minn. L.Rev. (forthcoming 2019)
(manuscript at 42).
175 Id., manuscript at 36-42.

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people or their families, either in a regulatory setting or during the procurement
process. As discussed in this section, some laws do provide protections to
prison-retail customers, but these provisions tend to be piecemeal, outdated,
and not drafted with incarcerated people in mind. Without a regulatory agency
specifically focused on fairness and equity in the prison retailing sector,
advocacy groups have been pursuing increasingly sophisticated strategies to fill
in the gaps in consumer protection. While litigation and regulatory advocacy
have produced victories, such efforts are unlikely to result in comprehensive
protections without laws that are intentionally designed to provide ex ante
consumer protections to incarcerated people.
A. Telecommunications Law
As noted previously, the landmark Wright rulemaking grew out of a
2000 lawsuit challenging ICS rates. 176 When referring the matter to the FCC
under the doctrine of primary jurisdiction, the district court specifically cited
two statutory grants of jurisdiction that allowed the Commission to address the
plaintiffs’ concerns. First, the court pointed to the FCC’s powers over common
carriers, contained in title II of the Communications Act, specifically the
mandate to ensure that carriers’ “charges, practices, classifications, and
regulations” are “just and reasonable.” 177 In addition, the court cited the 1996
Act’s payphone provision, § 276, which directs the FCC to ensure competition
and “fair compensation” in the payphone industry while also classifying all
“inmate telephone service” as payphone service.178
In 2015, when the FCC issued its final ICS rules, it relied on both title
II and § 276 for jurisdiction. 179 The final rule imposed rate caps on all ICS
calls (both inter- and intrastate) and capped ancillary fees. 180 Significantly, the
FCC reaffirmed its earlier finding that site commissions were not a legitimate
cost of providing communications services for purposes of regulatory
accounting. 181 Two commissioners dissented from the final rule.
Commissioner Michael O’Rielly’s dissent appears to be motivated in party by
antipathy toward incarcerated people, 182 but then-Commissioner (now
Chairman) Ajit Pai wrote a more analytical dissent that accurately presaged the
outcome of the ICS industry’s petition for review to the U.S. Court of Appeals
for the District of Columbia Circuit. The Pai dissent criticized two aspects of
the final rule. First, Pai expressed doubt that the FCC had jurisdiction to
regulate intrastate rates and charges. In making this argument, he conceded that
many of the protections in the rule could be validly enacted as to interstate calls
176

See supra note 89 and accompanying text.
Wright v. Corr. Corp. of Am., No. 00-cv-293-GK, slip op. at 6-7 (D.D.C. Aug. 22, 2001), ECF
No. 94 (citing 47 U.S.C. § 201(b))
178 Id. at 8.
179 Second Report & Order, supra note 34 at ¶ 3, n.12 and accompanying text, 30 FCC Rcd. at
12766.
180 Id. ¶ 9, 30 FCC Rcd. at 12769.
181 Id. ¶ 118, 30 FCC Rcd. at 12819.
182 Id., Dissenting Stmt. of Comm’r Michael O’Rielly, 30 FCC Rcd. at 12971 (“Despite the
intentions of supporters, it is highly probable that the end result of the changes in this item will
lead to a worse situation for prisoners and convicts, to which I am only so sympathetic.”).
177

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under the commission’s title II authority, but he found the intrastate rate caps to
be insufficiently authorized by title II or § 276. 183 Pai’s second point of dissent
addressed the Commission’s calculation of the rates caps, which he argued did
not allow ICS carriers to recoup their costs. 184
The FCC issued its final rule in late 2015 and the ICS industry
immediately petitioned for review in the D.C. Circuit. On January 31, 2017,
shortly before the court held oral arguments, the FCC General Counsel filed a
notice with the court citing a change in the Commission’s membership, and
stating that the new majority had directed counsel to no longer defend the
Commission’s regulation of intrastate rates or the method for calculating the
2015 rate caps. 185 Although the Wright Petitioners, along with numerous
advocacy groups, had intervened in the litigation and continued to defend the
final rule, the FCC’s partial withdrawal still held legal significance, because the
majority of the appellate panel concluded that the regulatory provisions that the
Commission no longer defended were not entitled to Chevron deference. 186
A split panel of the D.C. Circuit vacated several parts of the FCC’s
2015 rules, in an opinion written by Judge Harry Edwards. The majority
forcefully disagreed that the Commission had broad jurisdiction to regulate
intrastate rates, and therefore vacated the rate caps and limits on ancillary fees,
as applied to intrastate calls. 187 While the Commission had cited 47 U.S.C.
§§ 201 and 276 as jurisdictional bases for regulating intrastate rates, the
majority focused on § 152(b)’s presumption against FCC regulation of
intrastate communications. The Commission, of course, had addressed this and
relied on § 276 when capping intrastate rates. 188 The majority acknowledged,
as it had to, that § 276 allowed the Commission to preempt state regulations;
however, the majority went on to find that § 276’s requirement that payphone
providers be “fairly compensated” allowed the Commission to require minimal
adequate compensation, but did not allow it to limit unfairly high
compensation. 189
Dissenting, Judge Cornelia Pillard wrote that the meaning of the faircompensation provision depended on “whether the word ‘fairly’ implies an
ability to reduce excesses, as well as bolster deficiencies, in the compensation
that payphone providers would otherwise receive.” Because the FCC had
adopted the expansive meaning after developing a thorough record as part of
notice-and-comment rulemaking, Judge Pillard argued that the Commission’s

183

Id., Dissenting Stmt. of Comm’r Ajit Pai, 30 FCC Rcd. at 12960-64.
Id., 30 FCC Rcd. at 12965-69.
185 Letter from David M. Gossett, Deputy Gen. Counsel, Global Tel*Link v. Fed. Comm’cns
Comm’n, No. 15-1461 (D.C. Cir. Jan. 31, 2017), ECF No. ___.
186 Global Tel*Link v. Fed. Comm’cns Comm’n, 866 F.3d 397, 407-408 (D.C. Cir. 2017).
Although the court issued a subsequent clarifying statement (id. at 416-419) claiming that the
intrastate rate regulation and rate-cap methodology would have failed even under Chevron
review, Judge Pillard’s dissent deftly points out why these provisions can be justified as one of
several plausible interpretations of the Telecommunications Act, which is precisely the type of
situation that Chevron is designed to address.
187 Id. at 402.
188 Second Report & Order, supra note 34 ¶¶ 108-109.
189 Global Tel*Link, 866 F.3d at 408-412.
184

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interpretation was entitled to Chevron deference and could be reversed only by
the agency through a new rulemaking. 190
Although the court was hostile to the Commission’s regulation of
intrastate matters, the majority echoed one of the more surprising aspects of
Commissioner Pai’s dissent, finding that the limits on ancillary fees associated
with interstate calls were proper under the Commission’s title II powers. 191 The
practical problem, however, is how to determine whether any given account fee
(e.g., a fee for making a prepayment) is related to inter- or intrastate calls, when
the account is used for both types of communications. 192
As for the Commission’s interstate rate caps, the ICS carriers
challenged the FCC’s methodology, not jurisdiction. The court was largely
sympathetic to the ICS industry, finding that the FCC’s exclusion of site
commissions from recoverable costs was arbitrary and capricious, and further
finding the use of industry-wide cost averages as a basis for rate caps was
legally improper. 193 Again parting ways with her colleagues, Judge Pillard
criticized the majority’s finding that site commissions are “obviously” costs of
providing communications. 194 She argued that a commission “might, in some
sense, be ‘related’ to the provision of payphone services . . . but it is not
‘reasonably’ related because acceding to such preexisting contractual
relationships is inconsistent with the statutory scheme [of ‘fair
compensation’].” 195
One of the only substantive portions of the D.C. Circuit’s opinion that
received unanimous approval from the panel was the holding vacating the
Commission’s rule requiring annual reporting of ICS carriers’ revenues and
costs related to video visitation services. The court noted that the Commission
had not explained how video visitation was a “communication by wire or
radio,” as required for the exercise of title II jurisdiction. 196

190

Id. at 420-421.
Id. at 415 (“Contrary to Petitioners’ contentions, the Order’s imposition of ancillary fee caps
in connection with interstate calls is justified. The Commission has plenary authority to regulate
interstate rates under § 201(b), including ‘practices . . . for and in connection with’ interstate
calls.”).
192 Id. at 415 (upholding FCC’s jurisdiction to limit ancillary fees for interstate calls, but
remanding because “we cannot discern from the record whether ancillary fees can be segregated
between interstate and intrastate calls.”); see also Mojica v. Securus Tech., No. 14-cv-5258, 2018
WL 3212037, *5-6 (W.D. Ark. Jun. 29, 2018) (discussing methodological difficulties of
allocating fees between inter- and intrastate calls).
193 GTL, 866 F.3d at 412-415.
194 Id. at 413.
195 Id. at 424.
196 Id. at 415.
191

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Table 2. Current Status of FCC ICS Rules
Citation

Substance

Judicial Challenge

Result

Prepaid call rate caps –
jails (tiered)
Prepaid call rate cap –
prisons
Collect call rate cap –
jails (tiered)
Collect call rate cap –
prisons

Yes – two-part challenge:
(1) rate caps challenged
to the extent applicable
to intrastate calls; (2)
intra- and interstate ratecaps challenged for not
allowing carriers to
recover costs.

No jurisdiction under §§ 201 or 276 to
require just and reasonable rates for
intrastate calls.

64.6020

Ancillary service charge
caps

Challenged as exceeding
FCC jurisdiction

64.6040
64.6060

Rate caps for TTY calls
Annual data reporting
requirement

No
Yes

64.6070

Mandatory tax provision

No

64.6080

Prohibition on per-call or
per-connection charges
Prohibition on flat-rate
calling
Prepaid account balance
requirements
Rate disclosure
requirements

No

(47 C.F.R.)
64.6010(a)
64.6010(b)
64.6010(c)
64.6010(d)

64.6090
64.6100
64.6110

Exclusion of site commissions held
arbitrary and capricious. Rate caps
based on industry-wide cost averages
not lawful; remanded for further
proceedings.
Limits on fees ancillary to interstate
calls expressly upheld. Limits related
to intrastate calls vacated.
Reporting rules related to video
visitation vacated; remaining
reporting requirements upheld.
Effective, as amended August 2016
(see 31 FCC Rcd. 9300).

No
No
No

The current status of the FCC’s ICS rules are summarized in Table 2,
and have led to a period of uncertainty. As for call rates, the D.C. Circuit
vacated the rate caps in the FCC’s 2015 order, which means interstate ICS rates
are now subject to the higher rate caps contained in the FCC’s 2013 interim
order, and intrastate rates are subject only to regulation by state public utilities
commissions. 197 At the same time, ICS carriers have sought to escape
regulation in some jurisdictions by citing their use of VoIP technology, which
is sometimes exempt from state regulation. 198 This leads to the possibility of
wholly unregulated intrastate rates, which is of particular concern in jails,
where incarcerated people are more likely to have ties to the local area and
therefore are more likely to make intrastate calls.
Ironically, the Court of Appeals reinforced the jurisdictional
importance of intra- and interstate calling at a time when even ICS carriers
acknowledge that there is no material difference in cost based on the
intra/interstate distinction. 199 Moreover, ICS carriers have already lost their
197

The 2013 order capped interstate rates at 21¢ per minute for prepaid calls and 25¢ for collect
calls, and also created “safe harbor” rates of 12¢ and 14¢ (for prepaid and collect calls,
respectively), which are presumed to be reasonable. First Report & Order, supra note 32 at ¶¶ 60
and 73, 28 FCC Rcd. at 14140, 14147.
198 See infra notes 239 and 240.
199 See Comments of Securus Technologies, Inc., In the Matter of the Amendment of ARM
38.5.3401, 38.5.3403, and 38.5.3405, the Adoption of New Rule I and the Repeal of ARM
38.5.3414 Pertaining to Operator Service Provider Rules, Montana Pub. Serv. Comm’n, at 5

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fight to prohibit non-incarcerated users from using VoIP routing to engage in a
type of pro-consumer regulatory arbitrage. 200 In 2009, Securus challenged the
ability of consumers to route ICS calls to a VoIP number assigned to the same
local dialing area as a distant prison in order to take advantage of lower prices
in jurisdictions that have capped intrastate rates. 201 The FCC rejected Securus’s
challenge and some consumers can now use this technology to take advantage
of any favorable disparities in inter- and intrastate ICS rates. Once again,
however, the potential salutary effects of VoIP routing illustrates the
differences between customers in prisons and jails. The family of someone
incarcerated for a prolonged period in a distant prison is likely to have the time
and financial incentive to set up a local-dial VoIP number if it allows for
significant savings over the long term. But the family of someone who
unexpectedly lands in jail and must make an emergency call does not
realistically have the ability to leverage such technology for their benefit.
Although the regulatory future of the ICS industry is unclear for a
variety of reasons, there are three prominent trends that can be gleaned from
recent experience: statutes that lag behind technology, the ascendency of
bundled services and cross-subsidies, and the importance of activism.
1. Technology Has Outpaced the Regulatory Framework
As is the case in many areas of telecommunications, the law governing
ICS carriers has not kept pace with technology. This is most notable in the
context of § 276, a statute of diminishing relevance outside of correctional
facilities, as payphones disappear from the landscape.202 But the disconnect
between statutory language and technological reality becomes even more
prominent as ICS carriers rely increasingly on emerging technologies like video
visitation and electronic messaging to drive revenue. While legislation
clarifying the FCC’s powers over these new services would be welcome, the
Commission need not wait for congressional action, since existing law already
provides sufficient regulatory jurisdiction. There are strong arguments in favor
of regulating non-telephone communications services under either title II of the
Communications Act or § 706 of the 1996 Act.
Section 706 of the 1996 Act expressly directs the FCC to “encourage
the deployment on a reasonable and timely basis of advanced
telecommunications capability to all Americans . . . by utilizing . . . price cap
regulation, regulatory forbearance, measures that promote competition in the
local telecommunications market, or other regulating methods that remove
barriers to infrastructure investment.” 203 Electronic messaging and video
(Sept. 19, 2017) (“[The VoIP technology] used by most ICS providers today means the ‘distance’
between the origination and termination points of an ICS call has little to no effect on the
transport costs of an ICS call.”).
200 In the Matter of Petition for Declaratory Ruling of Securus Tech., WC Dkt. No. 09-144,
Declaratory Ruling & Order, 28 FCC Rcd. 13913 (Sept. 26, 2013).
201 Id. ¶¶ 5-6, 28 FCC Rcd. at 13914-95.
202 See generally, Nathaniel Meyersohn, “There are still 100,000 pay phones in America,” CNN
Money (Mar. 19, 2018), https://money.cnn.com/2018/03/19/news/companies/payphones/index.html (accessed Dec. 11, 2018).
203 47 U.S.C. § 1302(a).

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conferencing are both classified as “advanced communications services” under
the Act. and thus fall within the scope of § 706. 204 The D.C. Circuit has
characterized § 706 as a grant of authority, 205 and the FCC relied on this
jurisdiction when issuing its 2015 Open Internet Order. 206 Even during the
brief period when the FCC had reclassified internet service as a title II service,
the Commission nonetheless eschewed rate regulation and other heavy-handed
intervention in favor of substantial regulatory forbearance, consistent with the
policy expressed in § 706. 207 Unlike broadband internet access, for which there
is a competitive (if highly concentrated) market, the FCC has already found that
ICS markets are not competitive and need regulation to correct market
failures. 208 Indeed, § 706’s reference to making advanced communications
available to “all Americans” should be interpreted for the benefit of
incarcerated people, since Congress clearly had incarcerated users in mind
when drafting the inmate phone provision of § 276, which was part of the same
legislation that enacted § 706. Accordingly, the FCC already has statutory
authority to impose price caps on new ICS technologies like video visitation
and electronic messaging.
Advanced technologies are also susceptible to regulation as a
telecommunications service under title II of the Act. ICS carriers make the
self-interested argument that ICS offerings are information services, because
federal policy (both before and after enactment of the 1996 Act) has been to
avoid regulation of such services. 209 But the FCC already determined that ICS
telephone service is not an information service, and the same reasoning should
be applied to advanced technologies. The essential defining characteristic of
telecommunications service is “the transmission of information between or
among points with no ‘change in the form or content.’” 210 The mutuallyexclusive category of information service encompasses products that store,

204

47 U.S.C. § 153(1).
Verizon v. Fed. Comm’cns Comm’n, 740 F.3d 623, 637 (“The question, then, is this: Does the
Commission’s current understanding of section 706(a) as a grant of regulatory authority represent
a reasonable interpretation of an ambiguous statute? We believe it does.”).
206 In the Matter of Protecting and Promoting the Open Internet, GN Dkt. 14-28 at ¶ 273-282
(Feb. 26, 2015), 30 FCC Rcd. 5601, 5721-5724; but see In the Matter of Restoring Internet
Freedom, WC Dkt. No. 17-108, Declaratory Ruling, Report and Order, and Order ¶¶ 267, 33
FCC Rcd. 311, 470 (Jan. 4, 2018) (“We find that provisions in section 706 of the 1996 Act
directing the Commission to encourage deployment of advanced telecommunications capability
are better interpreted as hortatory rather than as independent grants of regulatory jurisdiction.”).
207 Open Internet, supra note 206, at ¶¶ 434-542, 30 FCC Rcd. at 5804-5867.
208 See supra note 32 and accompanying text.
209 The categories “communications service” and “information service” were first developed in
the FCC’s Computer Inquiries, and subsequently enacted as statutory definitions as part of the
1996 Act. See 47 U.S.C. §§ 153(24), (50), and (53) (definitions); Nat’l Cable & Telecommc’ns
Ass’n v. Brand X Internet Servs, 545 U.S. 967, 975-977 (2005) (legislative history). During the
Wright rulemaking, GTL, Securus, and Telmate (an erstwhile competitor since acquired by GTL)
all explicitly argued that emerging technologies are information services. See Comments of
Prison Policy Initiative, In the Matter of Rates for Interstate Inmate Calling Services, WC Docket
No. 12-375, at 4, n.19 (Feb. 8, 2016) (collecting citations), available at
https://www.fcc.gov/ecfs/filing/60001394099.
210 Peter W. Huber, Michael K. Kellogg & John Thorne, Federal Telecommunications Law §
12.2.3 (2d ed. rev. 2018) (quoting 47 U.S.C. § 153(50)).
205

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retrieve, and process information. 211 Of course, ICS telephone service involves
extensive computer storage, retrieval, and processing of information, but in
denying the carriers’ requests to classify ICS as an information service, the
FCC concluded that such features were merely used to support the provision of
telecommunications service, and therefore should not be treated as information
services. 212 The same can be said for emerging technologies: the end-user pays
to transmit an un-modified message (either text-based or video) from point to
point. The carrier’s use of information services is incidental to the provision of
telecommunications service, and the facility’s use of extensive computerized
security features (which may qualify as information services) is an entirely
separate product.
Although the FCC has assiduously avoided regulating new
technologies under title II, market analysis should lead to a different result in
the case of service in correctional facilities. Even Chairman Pai, who objected
to the extent of the FCC’s new ICS rules, admitted that the ICS market is
riddled with failure and cannot be left to the whims of monopoly carriers. 213
Title II and § 706 allow the FCC to regulate wireline services regardless of the
specific technology utilized, and the Commission can use these powers
(informed by the court’s decision in the Global Tel*Link case) to craft a
regulatory regime that is not artificially limited to only one technology.
2. The New Cross-Subsidies
Modern regulatory theory generally favors unbundling of services. 214
Yet bundled contracts that combine regulated and unregulated services are
common in the ICS sector, 215 giving rise to a new twist on the longstanding
problem of cross-subsidies. Historically, U.S. telecommunications law has
focused on one type of cross-subsidy: an incumbent provider using revenues
from regulated services to subsidize unregulated services and charge belowmarket rates, thereby undercutting competition. 216 The probable cross211

47 U.S.C. § 153(24).
In the Matter of Petition for Declaratory Ruling by the Inmate Calling Services Providers
Task Force, Declaratory Ruling at ¶¶ 28-32, 11 FCC Rcd. 7362, 7374-7377 (“[E]nhanced
services do not include the functionality between the subscriber and the network for call set-up,
routing, cessation, caller or calling party identification, or billing and accounting.”).
213 First Report & Order, supra note 32, Dissenting Stmt. of Comm’r Ajit Pai, 28 FCC Rcd. at
14217 (“I believe that the government should usually stay its hand in economic matters and allow
the price of goods and services to respond to consumer choice and competition. But sometimes
the market fails. And when it does, government intervention carefully tailored to address that
market failure is appropriate. The provision of inmate calling services (ICS) is one such market. .
. . [W]e cannot necessarily count on market competition to keep prices for inmate calling
services just and reasonable.”).
214 Joseph D. Kearney & Thomas W. Merrill, The Great Transformation of Regulated Industries
Law, 98 Colum. L. Rev. 1323, 1340 (1998) (“Under the new paradigm, . . . carriers are required
to unbundle . . . end-to-end service into constituent parts in order to allow end-users to mix and
match different service elements to suit their own needs and tastes.”).
215 See Comments of Prison Policy Initiative, In the Matter of Rates for Interstate Inmate Calling
Services, WC Docket No. 12-375 (Jan. 19, 2016), available at
https://www.fcc.gov/ecfs/filing/60001379538 (discussing the increasing use of bundled contracts
by large ICS carriers).
216 In the Matter of Separation of Costs of Regulated Telephone Service from Costs of
Nonregulated Activities, CC Dkt. No. 86-111, Report & Order [hereinafter “Joint Cost Order”] ¶
212

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subsidies in the current ICS market are different: carriers are most likely using
excess revenues from unregulated video and electronic messaging service to
compensate for the rents they can no longer collect through phone rates. This
dynamic is not merely hypothetical—Securus has pitched potential investors by
touting the fact that 65% of its 2015 corporate revenues came from unregulated
business lines in 2015, up from 0% in 2007. 217
The dynamics of the new cross-subsidies are novel, but they are not
unheard of. In his categorization of cross-subsidies, economist D.A. Heald
acknowledged that regulated activities could be subsidized by competitive
products, but characterized such an arrangement as “uncommon.” 218 This type
of cross-subsidy cannot be sustained in the long term, to the extent that the
“economy outside the regulated sector is competitive.” 219 Of course, because
unregulated prison communication services are offered on a monopoly basis,
the unregulated market is not competitive, and this unusual breed of crosssubsidy can likely be perpetuated indefinitely.
When the FCC designed rules to prevent incumbent local exchange
carriers from cross-subsidizing unregulated
Table 3. Hypothetical Revenues
services, the Commission framed the issue as
(Phone Only)
one of ensuring that regulated rates remained
just and reasonable. 220 The same concerns
apply to the new type of ICS cross-subsides,
even though the flow of funds is inverted. The
FCC set ICS rate caps in reference to carrier
costs. Although the underlying cost data are
confidential, the FCC calculated the 2015 rate caps with the goal of allowing
carriers to operate
Table 4. Hypothetical Revenues (Bundled)
profitably. Assuming
this means net revenues
roughly in line with the
overall
telecommunications
industry, 221 and using
purely hypothetical
33, 2 FCC Rcd. 1298, 1304 (Feb. 6, 1987); see also Peter Temin, The Fall of the Bell System: A
Study in Prices and Politics 179-190 (1987) (discussion of Congressional action to address crosssubsidization in the Bell system).
217 Securus Lender Presentation, supra note 96, at 26 (“By investing in businesses that are not
regulated by the FCC / PSC / PUCs, Securus has successfully decreased its exposure to potential
rate of return regulation.”).
218 D.A. Heald, Public Policy Towards Cross Subsidy, 68 Annals of Pub. & Cooperative
Economics 591, 600 (1997).
219 Id.
220 Joint Cost Order, supra note 216 at ¶ 37, 2 FCC Rcd. at 1303 (“We reaffirm that protecting
ratepayers from unjust and unreasonable interstate rates is the primary purpose behind the
accounting separation of regulated from nonregulated activities, just as it is the purpose behind all
of our accounting and cost allocation rules. Our commitment to cost-based rates demands close
attention to the manner in which the costs a company uses to support its [regulated offerings] are
separated from the other costs of the company.”).
221 For illustrative purposes, Prof. Aswath Damodaran of the Stern School of Business at New
York University reports that after-tax unadjusted operating margin for the telecommunications

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numbers, a carrier’s profitability for a given contract could look something like
the data shown in Table 3, and the profit margin can be considered reasonable
and just. But if that contract was actually awarded on a bundled basis for phone
service, electronic messaging, and video visitation, then the carrier’s profit
under the contract—including all revenue and redistributed fixed network
costs—could resemble Table 4. Under this scenario, it is difficult to say that
the telephone rates are just and reasonable when they are an integral,
indispensable part of a contract that yields profits over three times the industry
average.
The FCC can easily head off this problem by regulating rates charged
for new technologies, as advocated in the previous section. In the absence of
this preferable resolution, any attempts to regulate telephone rates will prove to
be illusory unless accompanied by robust data collection that covers all bundled
services. Although the D.C. Circuit invalidated the FCC’s attempts to collect
data on video visitation revenue and costs, 222 the court did so based on an
inadequate record, not on an outright lack of jurisdiction, thus leaving the door
open for a renewed attempt at comprehensive, technology-neutral regulation of
communications service in correctional facilities.
3. Advocacy and Activism
The ICS advocacy campaign that has deservedly garnered the most
attention is the Wright rulemaking. 223 One positive byproduct of the FCC’s
years of inaction is that by the time the Commission finally promulgated rules,
a broad coalition of organizations who found common cause with the Wright
petitioners had joined in the calls for reform. In addition to numerous
advocates for the rights of incarcerated people, comments were submitted by
religious communities, disability-rights activists, the American Bar
Association, immigrant communities, the Minority Media and
Telecommunications Counsel, and the National Association of State Utility
Consumer Advocates. 224 The critically important work in the
telecommunications realm has encompassed litigation, regulatory advocacy,
and legislative campaigns, and has laid the groundwork for the next round of
the fight for fair telecom rates.
Title II of the Communications Act requires “just and reasonable” rates,
and provides consumer with a private cause of action to sue for violations. 225
But exercising this private right can be difficult. Many courts (including, most
obviously, the district court that heard the Wright case 226) have invoked the

services sector is 16.59% (as of January 2018). See Margins by Sector,
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/margin.html (accessed Dec. 11,
2018).
222 See supra, text accompanying note 196.
223 See supra § III.A.
224 Second Report & Order, supra note 34, appx B, 30 FCC Rcd. at 12926.
225 47 U.S.C. §§ 201(a) and 207; Global Crossing Telecomm’cns v. Metrophones Telecomm’cns,
550 U.S. 45, 53-54 (2007) (explaining private cause of action).
226 See supra notes 89-90 and accompanying text.

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doctrine of primary jurisdiction when faced with challenges to rates. 227 While
this doctrine does not necessarily bring about the conclusive end of a legal
challenge, it can result in decades of delay, as the Wright Petitioners can attest.
Another common roadblock to litigation is the “filed-rate” doctrine, a
rule that has clearly outlived its purpose, at least in the case of interstate ICS
rates. 228 In its classic form, the filed-rate doctrine “is a court-created rule to bar
suits against regulated utilities involving allegations concerning the
reasonableness” of rates contained in a filed tariff.229 Courts have used the
doctrine to dispose of litigation against ICS carriers, although applicability of
the doctrine depends greatly on the specific cause of action. In Daleure v.
Kentucky 230 plaintiffs challenged ICS rates and procurement practices under
various theories including 42 U.S.C. § 1983 and the Sherman Antitrust Act.
The district court dismissed the plaintiffs’ damages claims under the filed-rate
doctrine, but allowed the claims for injunctive relief under the Sherman Act to
proceed. 231 Offering some guidance to plaintiffs’ counsel is Arsberry v.
Illinois, 232 which also involved § 1983 and Sherman Act claims concerning
rates and procurement. The district court in Arsberry had dismissed all claims
under the filed-rate doctrine, but the Seventh Circuit found this application of
the doctrine too broad. While some of the plaintiffs’ claims did challenge high
rates, others simply challenged the fundamental fairness of the system by which
the rates were set. 233 Writing for a unanimous panel, Judge Posner found that
the latter class of claims should not have been dismissed under the filed-rate
doctrine, but that they were nonetheless properly dismissed on the merits. 234
The larger problem with application of the filed-rate doctrine to ICS
litigation is that the basic rationale for the doctrine has mostly disappeared at
the federal level. Tariffs for any type of interstate phone service (in- or outside
of prison) are no longer required under FCC rule. 235 Instead, non-dominant
carriers like ICS providers must publicly disclose rates and terms (confusingly,
many providers comply with this obligation by posting a document that they
refer to as a “tariff” even though it is governed by the FCC’s detariffing

227

Madeleine Severin, Is There a Winning Argument against Excessive Rates for Collect Calls
from Prisoners? 25 Cardozo L. Rev. 1469, 1490-1494 (2004).
228 Not all states have detariffed ICS rates, and in those states that have kept tariffing, the filedrate doctrine still applies. The doctrine is typically invoked by ICS providers in defending legal
challenges to exorbitant prices. See Nat’l Consumer Law Ctr., Access to Utility Service §
11.5.7.2, n.313 (6th ed. 2018) (collecting cases).
229 64 Am. Jur. 2d Public Utilities § 62 (2011).
230 119 F.Supp.2d 683 (W.D. Ky. 2000).
231 Id. at 690.
232 244 F.3d 558 (7th Cir. 2001).
233 Id. at 563 (“If the plaintiffs in this case wanted to get a rate change, the . . . [filed-rate]
doctrine . . . would kick in; but they do not, so it does not. Eventually they want a different rate,
of course, but at present all they are seeking is to clear the decks—to dissolve an arrangement
that is preventing the telephone company defendants from competing to file tariffs more
advantageous to the inmates.”).
234 Id. at 564-566.
235 In the Matter of Policy & Rules Concerning the Interstate, Interexchange Marketplace, CC
Dkt. No. 96-61, Second Report & Order, 11 FCC Rcd. 20730 (Oct. 31, 1996).

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order). 236 The posting of rates is meant to allow consumers to make informed
choices—a concept that is has no relevance in the world of monopoly ICS
contracts. When issuing its detariffing rule, the FCC concluded that
elimination of tariffs would “eliminat[e] the ability of carriers to invoke the
‘filed-rate’ doctrine,” 237 but some have argued that the FCC lacks the authority
to abolish this judicially-created rule. 238 The confusion has led some courts to
apply the doctrine to ICS rate challenges, even though such rates have long
been detariffed at the federal level. 239 At the state level, when the prospect of
robust regulation threatens to erode profits, ICS carriers have been known to
strategically detariff services in order to escape regulatory jurisdiction. 240
Accordingly, it is only fair to provide reciprocal treatment for ratepayers, by
eliminating the filed-rate doctrine for detariffed services.
The filed-rate doctrine has not stymied all attempts at litigating ICS
issues. The district court in Fayetteville, Arkansas certified a class action
against Secruus and GTL in 2017, when plaintiffs challenged the legality of site
commissions under title II of the Communications Act and common-law unjust
enrichment. 241 But after the D.C. Circuit vacated the FCC’s attempts to rein in
site commissions, the court decertified the class and dismissed the named
plaintiffs’ claims. 242
A similar class action in New Jersey has faired better. Filed in 2013,
plaintiffs challenged ICS rates under title II, 42 U.S.C. § 1983, New Jersey’s
consumer protection act, and a theory of unjust enrichment. 243 The court stayed
the case in 2014, pending the outcome of the FCC’s rulemaking. 244 After the
stay lifted, plaintiffs chose to seek class certification on only two of their
claims: violation of the New Jersey Consumer Fraud Act (“CFA”), and
violations of the Fifth Amendment Takings Clause (actionable via § 1983).
GTL opposed class certification, citing the decertification of the Arkansas class
action, but the court dismissed this argument as a red herring. Contrasting the
236

Id. ¶ 84, 11 FCC Rcd. at 20776.
Id. ¶ 55, 11 FCC Rcd. at 20762.
238 Charles H. Helein, Jonathan S. Marashlian, & Loubna W. Haddad, Detariffing and the Death
of the Filed Tariff Doctrine: Deregulating in the “Self” Interest, 54 Fed. Comm. L.J. 281 (2002).
239 E.g., Daleure v. Commw. of Ky., 119 F.Supp.2d 683, 686 (W.D. Ky. 2000) (applying the filedrate doctrine upon finding “State and federal regulatory agencies approved all of the . . . rates”
challenged in the complaint (emphasis added)); but see Antoon v. Sercurus Tech., No. 5:17-cv5008, 2017 WL 2124466 (W.D. Ark. May 15, 2017) (denying motion to dismiss under filed-rate
doctrine because Securus utilizes VoIP technology and the Arkansas Public Service Commission
lacks jurisdiction over VoIP services or provider).
240 See Complaint, Pearson v. Hodgson, No. 18-cv-11130-IT, at ¶¶47-49 (D. Mass. May 30,
2018), ECF No. 1-1 (when Massachusetts Dept. of Telecommunications & Cable imposed
intrastate ICS rate caps, Securus withdrew its tariff and charged rates in excess of the new caps,
alleging that its service is delivered via VoIP and therefore exempt from state regulation under
Mass. Gen. Laws ch. 25C, § 6A).
241 In re Global Tel*Link Corp. ICS Litigation, No. 14-cv-5275, 2017 WL 471571 (W.D. Ark.
Feb. 3, 2017), decertified sub nom. Mojica v. Securus Tech., 2018 WL 3212037 (W.D. Ark. Jun.
29, 2018).
242 Mojica v. Securus Tech., No. 14-cv-5258, 2018 WL 3212037 (W.D. Ark. Jun. 29, 2018).
243 Complaint, James et al. v. Global Tel*Link, et al., No. 13-cv-4989 (D.N.J. Aug. 20, 2013),
ECF No. 1.
244 James v. Global*Tel Link, No. 13-cv-4989, 2014 WL 4425818 (Sept. 8, 2014).
237

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New Jersey CFA claims with the unjust enrichment claims in the Arkansas
case, the court noted that the common law of unjust enrichment depends
heavily on plaintiffs’ individualized circumstances, (contravening the
commonality requirement of Federal Rule of Civil Procedure 23(a)(2)),
whereas a CFA claim was based on the overall reasonableness of GTL’s rates,
and did not require adjudication of any facts specific to plaintiffs’ specific
situations. 245 The New Jersey court also highlighted the differences between
the Arkansas plaintiffs’ theory that site commissions were per se unreasonable
under the Communications Act, and the New Jersey plaintiffs’ allegations that
specific commissions in certain New Jersey facilities violate the Takings
Clause. 246 The New Jersey court granted class certification on August 6, 2018,
but the case has been largely dormant since that date. While the New Jersey
case is arguably the most successful ICS litigation since the Wright lawsuit, it is
entirely retrospective—in 2016, the New Jersey legislature prohibited site
commissions, cracked down on ancillary fees, and capped call rates at 11¢ per
minute. 247 Accordingly, the class action only concerns rates charged prior to
the 2016 legislative fix.
The history of activism on behalf of families of incarcerated people in
the United States is long and storied. 248 Over several decades, activists have
gained enough experience in litigating ICS issues that this advocacy work is
now paying dividends. While much work remains to be done in the
telecommunications area, advocacy organizations should also prioritize
litigation and regulatory advocacy in other legal fields, as discussed in the
following sections.
B. Financial Services Law, Money Transmitters, and Prepaid
Accounts
The legal aspects of correctional banking are odd in that the actual law
of banking is mostly implicated at the periphery. Although inmate trust funds
are typically held in some kind of depository account, the incarcerated person
with equitable title to the money has no direct customer relationship with the
depository institution. Indeed, the job of a correctional banking vendor is
simple: receive deposits and facilitate payments on behalf of a customer
population who are not allowed to use cash, checks, or payment cards. As a
non-bank entity that uses technology to facilitate payments by or for the benefit
of incarcerated people, correctional banking vendors are a niche type of
financial technology (or “fintech”) firm. 249 But even in an economic sector
245 James v. Global*Tel Link, No. 13-cv-4989, 2018 WL 3727371, *11 (D.N.J. Aug. 6, 2018)
(opinion re: motion to certify class).
246 Id.
247 N.J. Stat. § 30:4-8.12.
248 Ruth Wilson Gilmore, You Have Dislodged A Boulder: Mothers and Prisoners in the Post
Keynesian California Landscape, 8 Transforming Anthropology 12 (1999) (examining grassroots
family responses to mass incarceration).
249 Adam J. Levitin, “Written Testimony before the U.S. House of Representatives, Comm. on
the Fin. Servs., Subcomm. on Fin. Institutions & Consumer Credit” at 4 (Jan. 30, 2018),
https://perma.cc/SNH7-PU6G (defining a fintech as a nonbank financial service company that
uses “some sort of digital technology to provide financial services to consumers”).

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generally known for over-hyping its transformative nature, 250 correctional
banking fintechs do not provide any type of innovative or valuable service that
justifies the high prices imposed on consumers.
One of the few issues in the correctional banking sector to have
received extensive judicial attention provides an important illustration of
current trends, although for reasons other than those discussed by the courts.
Four circuit courts of appeals have addressed the question of whether
incarcerated people are entitled to interest earned on their trust account
balances, 251 with only one court holding that the beneficiary has a property
right to earned interest. 252 Given the small balances in most incarcerated
peoples’ trust accounts, and today’s low interest rates, this may seem like an
academic debate. But the most recent appellate opinion to address the issue
contains an important factual detail.
Young v. Wall involved a challenge to Rhode Island’s 2001 decision to
stop paying interest on trust accounts, when the Department of Corrections
“decided to outsource management of a wide swath of back-room systems.” 253
According to the court, the repeal of the previous interest policy was the result
of “[c]omments from prospective vendors” who sought the contract to manage
Rhode Island’s correctional banking system. 254 The plaintiff in Young did not
prevail, and the opinion stands as an illustration of the prison retail economy as
applied to correctional banking: accounts that had previously been held and
invested by the state treasurer (with earned interest remitted to beneficiaries)
were now controlled by a vendor and earned interest was retained for the
benefit of the DOC. 255 This fact pattern is echoed in many correctionalbanking contracts, which seem to prioritize bureaucratic convenience over the
best interests of the incarcerated accountholders.
1. Categorizing Prepayments
As alluded to previously, prison retail payments can be sorted into two
major types: contemporaneous ( “cash”) 256 payment, or prepayment. In the
case of prepayment, an incarcerated person or their relative transfers funds to a
vendor who then creates an “account” that can be charged for future purchases.
The use of the term “account” is somewhat misleading, since such prepayments
should not be analogized to deposit accounts; rather, they are unsecured
250 Id. (“[D]espite the regular use of buzzwords like ‘transformative’ and ‘disruptive’ in
discussions about fintechs, there really isn’t anything particularly transformative or disruptive
about them.”).
251 See Emily Tunink, Note, Does Interest Always Follow Principal?: A Prisoner’s Property
Right to the Interest Earned on His Inmate Account under Young v. Wall, 642 F.3d 49 (1st Cir.
2011), 92 Neb. L.Rev. 212, 213 (2013) (discussing circuit split).
252 Schneider v. Cal. Dept. of Corr., 151 F.3d 1194 (9th Cir. 1998).
253 Young v. Wall, 642 F.3d 49, 52 (1st Cir. 2011).
254 Id.
255 Joint Stmt. of Facts, Young v. Wall, No. 03-220S (D.R.I. Sept. 9, 2005), ECF No. 71.
256 For purposes of this discussion “cash” is used as an admittedly imprecise shorthand for
contemporaneous payment for goods or services. In the prison retail setting, such a payment is
typically made by electronic fund transfer from a trust account (if the purchaser is incarcerated)
or by payment card or through a money transmitter (if the purchaser is not incarcerated).

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contractual obligations of the vendor. 257 Making matters even more confusing
for consumers, many correctional banking vendors collect trust account
deposits and retail-transaction prepayments, which can cause some consumers
to confuse the two types of transactions. 258
Retail prepayments fit into the expansive new category of payment
mechanisms sometimes referred to as “merchant-authorized consumer cash
substitutes” (or “MACCS”). 259 As discussed below, MACCS in the prisonretail setting are riddled with oppressive terms and conditions. Why then, are
they so common? Sometimes there is no alternative, but even when there is a
cash option, dual forces encourage the use of MACCS by some customers.
First, facility instructions or vendor marketing materials may encourage
customers to use prepayment options without fully explaining available
alternatives. Second, incarcerated people may seek to avoid routing funds
through trust accounts in order to avoid levies for fees, fines, restitution, or civil
judgments. 260
Prison-retail prepayments raise the same concerns that are implicated
by the wider spectrum of MACCS, specifically merchant insolvency and loss of
prepaid funds through forfeiture provisions. 261 Merchant insolvency is a major
concern because prison retailers tend to be closely-held firms whose financial
health is difficult to gauge. In the event of an insolvency event, customers with
prepaid accounts would hold (likely-worthless) unsecured claims. Although
banks and licensed money transmitters are subject to regulation that is
expressly designed to prevent and/or mitigate a covered-entity’s insolvency, 262
there is no comparable regime that covers prison retailers, except to the extent
that a company owns a subsidiary that is a licensed money transmitter.
Pernicious forfeiture provisions can result in substantial unfairness to
customers, by eating away at prepaid balances through “service” or inactivity
fees. 263 Some vendors will refund prepaid amounts upon a customer’s release
from custody, while others do not. Some vendors have even advertised prepaid
products as a way for correctional agencies to avoid unclaimed property
laws. 264 These provisions are entirely a creature of private contract and could
easily be prevented through the terms of the vendor-facility contract. Thus far,
few facilities have shown any interest in protecting consumers by prohibiting
such confiscatory practices.

257

See Eniola Akindemowo, Contract, Deposit or E-Value? Reconsidering Stored Value
Products For a Modernized Payments Framework, 7 DePaul Bus. & Comm. L.J. 275, 278 (2009)
(“[Stored value products] are technology-enabled contractual constructs rather than deposits, and
. . . the use of deposit analogies to analyze them is generally inappropriate.”).
258 See supra Figure 3.
259 Norman I Silber & Steven Stites, “Merchant Authorized Consumer Cash Substitutes,” Hofstra
Payments Processing Roundtable (Mar. 14, 2018), http://ssrn.com/abstract=3161453.
260 See supra note 24.
261 Silber & Stites, supra note 259, at 3 (“One problem universal to MACCS is the merchant
insolvency; another is the absence of standard terms in MACCS agreements.”).
262 Akindemowo, supra note 257, at 345 (banking regulations); Kevin V. Tu, Regulating the New
Cashless World, 65 Ala. L. Rev. 77, 92-94 (2013) (money transmitter regulations).
263 See supra note 127-127 and accompanying text.
264 See Prison Policy Initiative, supra note 64, at 5, n.22.

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2. If You’re Dealing with Cash, What Financial Services
Laws Apply?
Laws that can potentially apply to cash payments include general trust
law, the Electronic Fund Transfer Act (“EFTA”), 265 state money-transmitter
statutes, and the Gramm-Leach-Bliley Act (“GLBA”). 266 To the extent a
transaction involves an inmate trust account, the first step for consumer
advocates should be to analyze whether the account is a bona fide trust, and if
so, whether the trustee (most likely the correctional system or another
government agency) has breached its fiduciary duty by, for example, allowing a
vendor to diminish trust property by charging unreasonable fees. The trust
determination will depend on the law or administrative policy that creates the
inmate trust system. Although the name “inmate trust account” by itself is not
dispositive, such accounts are often governed by generally applicable trust
law. 267 If the general law of trusts applies, beneficiaries may be able to
challenge transaction fees to the extent the fees are not commercially
reasonable. 268 The determination of commercial reasonableness will be factspecific and will likely involve a close examination of the purpose of the
inmate trust fund, as defined by the enabling statute or other applicable
authority. 269 In addition, if a correctional agency acts as trustee of an inmate
trust and receives commissions from a third-party administrator, then the
agency may be vulnerable to a charge of breaching its duty of loyalty. 270
The EFTA, as implemented by Regulation E, 271 is likely apply to many
transfers of money by family members, but its actual substantive protections are
minimal. If a family member pays using a debit card, that transaction will
generally be governed by EFTA. 272 On the recipient side, if an inmate trust
account is a bona fide trust, then the account (and each individual’s beneficial

265

15 U.S.C. § 1693, et seq.
Gramm-Leach-Bliley Financial Modernization Act, Pub. L. 106-102, 113 Stat. 1338 (1999)
(codified as scattered sections of titles 12, 15, 16, and 18, U.S. Code).
267 E.g., Matson v. Kansas. Dept. of Corr., 301 Kan. 654 (2015) (“[W]e have no difficulty finding
the plain language of the applicable statutes establishes the inmate trust fund is, in fact, a trust
subject to the [Kansas Uniform Trust Code].”).
268 E.g., Upp v. Mellon Bank, N.A., 799 F.Supp. 540, 544-545 (E.D. Pa. 1992) (finding a breach
of fiduciary duty by trustee who incurred bank fees not justified by cost or results), vacated for
lack of diversity jurisdiction sub nom. Packard v. Provident Nat’l Bank, 994 F.2d 1039 (3d Cir.
1993).
269 See e.g., E. Armata, Inc. v. Korea Commercial Bank of NY, 367 F.3d 123, 133-134 (2d Cir.
2004) (holding that trustee of statutory trust created by the Perishable Agricultural Commodities
Act did not breach fiduciary duties by holding trust funds in a bank account subject to fees
because “maintaining a checking account with ‘commercially reasonable’ terms may facilitate,
rather than impede, the fulfillment of a PACA trustee’s duty to maintain trust assets so that they
are freely available to satisfy outstanding obligations to sellers of perishable commodities”
(internal quotation marks and citation omitted)).
270 Restatement (Third) of Trusts § 78(2) (2007) (“[T]he trustee is strictly prohibited from
engaging in transactions that involve self-dealing or that otherwise involve or create a conflict
between the trustee’s fiduciary duties and personal interests.”).
271 12 C.F.R. pt. 1005.
272 12 C.F.R. § 1005.3(b)(1)(v).
266

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interest therein) is exempt from the EFTA’s definition of an “account.” 273 In
any event, even to the extent that EFTA applies to a particular account transfer,
the law is largely concerned with preventing unauthorized transactions, which
does not appear to be a widespread problem in prison retailing. Rather, the
primary problem is exorbitant fees, but EFTA contains little direct regulation of
fees, 274 instead favoring disclosure of costs in the hopes that consumers will
make informed choices. In the context of correctional banking, this structure is
an ill fit, since consumers have little meaningful choice.
If a contractor facilitates transfers into or out of an inmate trust account,
the contractor is most likely governed by state-level money transmitter laws. 275
These laws vary greatly by state, 276 and while there is a Uniform Money
Services Act, it has only been adopted by seven states and the Virgin Islands. 277
The Uniform Act covers businesses that “receiv[e] money or monetary value
for transmission,” 278 but does not apply to a merchant that collects prepayment
for future transactions. 279 While the Uniform Act exempts state and local
governments from its coverage, there is no exemption for an agent of a
government 280—a feature that should be retained if calls for a federal money
transmitter license are developed. 281
A final body of law worth mentioning is GLBA. Although this statute
is often criticized for its weaknesses, even its slim protections represent an
improvement for correctional banking customers. The provisions most relevant
to correctional banking are the privacy provisions found in title V of the GLBA.
These rules are applicable to entities that engage in “financial activities,”
including transferring and safeguarding money. 282 As a covered entity that is
not overseen by a bank regulator, correctional banking vendors are covered by
273

12 C.F.R. § 1005.2(b)(3) (Regulation E’s definition of “account” excludes “an account held
by a financial institution under a bona fide trust agreement”); see also 12 C.F.R., pt. 1005, appx.
B ¶ 2(b)(2), cmt. 1 (“The term ‘bona fide trust agreement’ is not defined by the Act or regulation;
therefore, financial institutions must look to state or other applicable law for interpretation.”).
274 One of the few provisions of the EFTA that directly restricts fees is contained in the gift card
provisions in the CARD Act of 2009, which include restrictions on dormancy and service fees.
These rules do not apply to prison-retail MACCS, because the statute excludes stored value that
is “reloadable and not marketed or labeled as a gift card or gift certificate.” 15 U.S.C. § 1693l1(a)(2)(D).
275

But see Prison Policy Initiative, supra note 64, at 11, n.54 and accompanying text (discussing
JPay’s unverified allegation that “few” correctional money services business comply with
applicable state regulations).
276 Tu, supra note 262, at 86, n. 44.
277 Unif. Money Servs. Act, ed. notes, 7A U.L.A. ___ (20__).
278 Id. § 102(14).
279 Id. § 102, cmt. 12 (“[O]nly stored value that consists of a medium of exchange evidence in
electronic record would qualify as stored value for purposes of regulation. A medium of
exchange needs to be something that is widely accepted. Closed-end systems, as mere bilateral
units of account, therefore would be excluded from regulation.”).
280 Id. § 103(3); see also id. § 201(a)(2) (licenses are not required for an agent of a licensee, but
the Act contains no comparable provision for an agent of an exempt entity).
281 E.g., Levitin, supra note 249 at 16 (“A federal money transmitter license, coupled with some
sort of federal insurance for funds held by money transmitters . . . would be a simple move that
would help reduce unnecessary regulatory burdens.”).
282 15 U.S.C. § 6809(3); 12 U.S.C. § 1843(k)(4)(A).

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the GLBA implementing regulations issued by the FTC. 283 The GLBA privacy
provisions that can potentially benefit incarcerated consumers include
notification of privacy practices, the ability to opt out of certain information
sharing, and data-breach notification requirements. 284 Covered entities must
also develop a data security plan, which must include certain elements
designated by the FTC. 285 Publicly available evidence suggests that
correctional banking vendors give little thought to complying with GLBA. 286
Although noncompliance cannot be addressed through private litigation (GLBA
does not include a private cause of action), a consumer who can show injury
resulting from a covered entity’s failure to comply with the GLBA standards,
may be able to bring a UDAP claim on that basis. 287
3.

Legal Issues Related to Release Cards

The area of correctional banking that is most clearly covered by the
EFTA is the use of prepaid debit cards (“release cards”) to pay amounts due to
incarcerated people upon their release from custody. 288 As open-loop stored
value cards that can be used on the MasterCard payment network, release cards
are considered access devices for purposes of the EFTA. 289 Although the U.S.
District Court in Oregon ruled in 2016 that release cards were not covered by
the EFTA, 290 that holding has clearly been abrogated by subsequent
amendments to Regulation E. Effective April 1, 2018, Regulation E’s
definition of “account” includes prepaid accounts, 291 and the CFPB’s
commentary explaining the amended rule specifically cites release cards as a
type of prepaid product that is covered by the new definition. 292 While the
CFPB’s decision to expressly include release cards within the scope of
Regulation E is an improvement, it is not a panacea because of Regulation E’s
lack of direct price regulation.

283

16 C.F.R. § 313.1(b).
Id. §§ 313.5 (annual privacy notices), 313.7 (opt-out procedure), and
285 Id. § 314.4.
286 The one exception is JPay, which briefly mentions GLBA’s data protection provisions in its
privacy policy. Despite this terse reference to the law, JPay does not appear to address GLBA
compliance in its bid proposals, nor is there any mention of the consumer disclosure and opt-out
procedures.
287 Nat’l Consumer Law Ctr., Fair Credit Reporting § 18.4.1.14 (9th ed. 2017).
288 See supra note 64 and accompanying text.
289 12 C.F.R. § 1005.2(a)(1).
290 See Brown v. Stored Value Cards, Inc., No. 15-cv-01370-MO, 2016 WL 4491836, at *1-2
(order dismissing EFTA claim) (D. Or. Aug. 25, 2018), appeal docketed No. 18-35735 (9th Cir.
Aug. 31, 2018). The court concluded that release cards were not covered by EFTA, by citing
Regulation E’s gift card provision that exempts stored value cards that are not “marketed to the
general public.” See 12 C.F.R. § 1005.20(b)(4). In reaching this holding, the court specifically
cited the CFPB’s staff commentary concerning the scope of the gift card exemption. Brown,
2016 WL 4491836 at *2 (citing 12 C.F.R. § 1005.2, Supp. I [sic – should be 12 C.F.R. § 1005.20,
Supp. I, ¶ 20(b)(4)]).
291 12 C.F.R. § 1005.2(b)(3) (2018).
292 Bureau of Consumer Financial Protection, Prepaid Accounts under the Electronic Fund
Transfer Act (Regulation E) and the Truth in Lending Act (Regulation Z),” [hereinafter
“Regulation E Amendments”] 81 Fed. Reg. 83934, 83968 (Nov. 22, 2016).
284

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Regulation E prohibits payers from requiring a consumer to use a
certain financial institution (including a specific prepaid card) for receipt of
wages or government benefits. 293 During the CFPB’s last EFTA rulemaking,
several advocacy groups requested that the Bureau extend the compulsory-use
prohibition to release cards. 294 Although the Bureau declined to adopt the
requested changes, it did note that “to the extent that . . . prison release cards
are used to disburse consumers’ salaries or government benefits . . . such
accounts are already covered by § 1005.10(e)(2) and will continue to be so
under this final rule.” 295 This “clarification” actually creates some uncertainty,
because it does not specify whether a payroll disbursement must be
contemporaneous with the employee’s earning of the underlying compensation.
When someone is released from prison, they might receive disbursement of
accumulated wages earned during the term of their incarceration. To the extent
that the compulsory-use prohibition applies to delayed disbursements of wages,
then Regulation E would prohibit mandatory use of release cards to make such
payments.
Consumer litigation concerning release cards holds great promise.
Encouragingly, most courts have held that arbitration provisions in release-card
contracts are unenforceable, given the inability of consumers to realistically
withhold their consent. 296 The outlier case, where an arbitration agreement was
held enforceable, is a case from Florida where the district court found the
plaintiff had been given a clear choice of receiving his funds via debit card or
check. 297 While class certification for an EFTA claim is currently pending in
the Western District of Washington,298 most class actions that have survived a
motion to dismiss or led to an advantageous settlement have relied on other
legal theories, such as Fifth Amendment takings, unjust enrichment,
conversion, or violations of UDAP statutes. 299
293

12 C.F.R. § 1005.10(e)(2).
See Prison Policy Initiative, supra note 64, at 8-9.
295 Regulation E Amendments, supra note 292, 81 Fed. Reg. at 83985.
296 Reichert v. Keefe Commissary Network, No. 17-cv-4848-RBL, 2018 WL 2018452, at *2
(order denying motions to compel arbitration) (W.D. Wash. May 1, 2018) (“All contracts,
including those to arbitrate disuptes, must have mutual assent, and Defendants’ ‘contract’ to
arbitrate is unenforceable and unconscionable under Washington law.”); Brown v. Stored Value
Cards, Inc., No. 15-cv-01370-MO, 2016 WL 755625, at *4 (order denying motion to compel
arbitration) (D. Or. Feb. 25, 2016) (“[Plaintiff] had to take the card and had to work through the
Defendants’ system in order to get her money back. . . . It is not clear that Plaintiff was presented
with a meaningful choice, as such I DENY the Motion to Compel.”); see also Regan v. Stored
Value Cards, Inc., 85 F.Supp.3d 1357 (N.D. Ga. 2015), aff’d 608 Fed. Appx. 895 (11th Cir.
2015) (defendants argued that plaintiff had impliedly accepted or ratified the cardholder
agreement through his use of the release card; court denied motion to compel arbitration and
ordered an evidentiary hearing on whether a contract had been formed; case settled before
evidentiary hearing).
297 Pope v. EZ Card & Kiosk, LLC, No. 15-cv-61046, 2015 WL 5308852 (S.D. Fla. Sept. 11,
2015).
298 Complaint, Reichert, No. 17-cv-4848-RBL, at ¶¶ 110-121 (W.D. Wash. Oct. 20, 2017), ECF
No. 1.
299 See Reichert, 2018 WL 2018452, at *3 (denying motion to dismiss plaintiff’s conversion and
unjust enrichment claims, as well as claims under the Takings Clause of the Fifth Amendment
(actionable through § 1983) and the Washington Consumer Protection Act); Brown v. Stored
Value Cards, Inc., No. 15-cv-01370-MO, 2016 WL 4491836, at *4-5 (Aug. 25, 2016) (denying
294

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UDAP Statutes

Statutes in every state prohibit the use of unfair or deceptive acts or
practices (“UDAP”) in consumer transactions. In the past, UDAP laws have
been of limited relevance in prison because incarcerated people engaged in
relatively few commercial transactions. 300 With the rise of prison retailing,
these laws are becoming increasingly salient, although contractual prohibitions
on class adjudication remain a substantial barrier. UDAP statutes allow
enforcement by state attorneys general, but also provide a private cause of
action. 301 The private enforcement option is critically important because state
attorneys general are unlikely to aggressively promote the rights of incarcerated
people, since doing so would typically be met with consternation by agencies
that are either clients of the attorney general (in the case of state prison
systems) or at the very least are ideologically aligned with the state’s chief law
enforcement officer (in the case of county jails).
Consumers who seek relief under UDAP statutes must be mindful of
what specific prong (unfairness or deception) they rely on. As defined by the
FTC (and many states that follow the agency’s lead), a deceptive practice
requires a false or misleading material claim or omission that is likely to
mislead a consumer. 302 Businesses that routinely make misleading claims often
do so in an effort to lure unsuspecting consumers. Because prison retailers
have a captive customer base, they do not have to worry about attracting
customers and vendor acts of deception are likely to arise on a case-by-case
basis. Indeed, prison-retail terms and conditions often spell out customers’
unfair treatment in great detail.
Consumers are more likely to find a viable cause of action under the
unfairness prong of a UDAP statute or, in states that recognizes such claims, a
claim of unconscionability. Under the FTC Act, a practice is unfair if it is
“likely to cause substantial injury to consumers which is not reasonably
avoidable by consumers themselves and not outweighed by countervailing
benefits to consumers or to competition.” 303 The inability of incarcerated
consumers to avoid harmful transactions is obvious: prison retailers sell
essential goods (food, clothing) or services (communication with family)
through state-created monopolies. Doing business with an ICS carrier or

motion to dismiss plaintiff’s claims for conversion and unjust enrichment); First Amended
Complaint, Adams v. Cradduck, No. 13-cv-05074-PKH (W.D. Ark. May 9, 2013), ECF No. ___
(pleading Fourth and Fourteenth Amendment violations (actionable through § 1983), conversion,
and trespass to chattels; a class settlement was subsequently approved (see ECF No. ____)).
300 E.g., Ellibee v. Aramark Corr. Servs., 37 Kan. App. 2d 430, 433 (2007) (dismissing UDAP
claim against prison foodservice provider because plaintiff was not a party to the contract); but
see Sisney v. Best, Inc., 754 N.W.2d 804, 812 (S.D. 2008) (plaintiff adequately pleaded deceit
claim against prison foodservice vendor by alleging that vendor had represented bread to be
kosher, even though vendor had admitted under oath that it had not received kosher certification).
301 See generally Dee Pridgen, The Dynamic Duo of Consumer Protection: State and Private
Enforcement of Unfair and Deceptive Trade Practices Law, 81 Antitrust L.J. 911 (2017).
302 Cliffdale Assocs., Inc., 103 F.T.C. 110, 1984 WL 565319, *37 (1984) (“[T]he Commission
will find an act or practice deceptive if, first, there is a representation, omission, or practice that,
second, is likely to mislead consumers acting reasonably under the circumstances, and third, the
representation, omission, or practice is material.”).
303 15 U.S.C. § 45(n).

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commissary vendor is unavoidable. As one court found, families incur
exorbitant prices and unfair terms “out of sheer desperation for contact with
their loved ones.” 304
Different types of substantial consumer injury are discussed in the
following subsections; for now, it is worth noting that the small dollar-amount
of most prison retail transactions is not a bar to relief—“substantial” injury for
purposes of the FTC Act includes small harms inflicted by a seller on a large
number of people. 305 In addition, a seller’s intent is irrelevant—a substantial
injury is actionable even without malice or culpability on the part of the
seller. 306
1.

Prices

Plaintiffs who challenge prices should take care to highlight the aspects
of prison retailing that resemble unfair pricing practices that have previously
formed the basis for valid UDAP claims—practices such as use of monopoly
power to extract excessive fees, 307 or paying kickbacks to the issuer of a
government contract. 308 Some jurisdictions may require some type of
independent wrongdoing in addition to unreasonably high prices. 309 In a class
action, a finding of unconscionable prices need not be made customer-bycustomer, but rather can be based on judicial comparison of end-user prices to
the seller’s average costs. 310
Consumers have used UDAP statutes to challenge inflated monopoly
prices charged by ICS carriers. For example, plaintiffs in Arkansas challenged
Securus’s intrastate rates under that state’s Deceptive Trade Practices Act
(“ADTPA”). 311 Among other defenses, Securus argued that high prices were
not actionable under the ADTPA, but the district court disagreed, citing the
304

James v. Global*Tel Link, No. 13-cv-4989, 2018 WL 3727371, *2 (D.N.J. Aug. 6, 2018)
(opinion re: motion to certify class).
305 Am. Fin. Servs. Ass’n v. Fed. Trade Comm’n, 767 F.2d 957, 972 (D.C. Cir. 1985) (“An injury
may be sufficiently substantial, however, if it does a small harm to a large number of people, or if
it raises a significant risk of concrete harm.” (quoting Letter from FTC to Senators Ford &
Danforth (Dec. 17, 1980), reprinted in H.R. Rep. No. 156, Pt. 1, 98th Cong., 1st Sess. 33-40
(1983))).
306 Id. 982.
307 E.g. Ford v. ChartOne, Inc., 908 A.2d 72 (D.C. App. 2006) (consumer pleaded a valid claim
for unconscionably high prices under the D.C. Consumer Protection Procedures Act, where
plaintiff’s only way to obtain copies of his own medical records was to pay $6.36 per page to
contractor selected by the medical provider).
308 Stalker v. MBS Direct, No. 10-11355, 2011 WL 797981, at *6 (E.D. Mich. Mar. 1, 2011)
(plaintiffs properly stated a claim under the Michigan Consumer Protection Act by alleging that
4-11% commissions that book vendor paid to school districts unreasonably inflated cost of
textbooks sold to students); class cert. denied 2012 WL 6642518 (E.D. Mich. Dec. 20, 2012).
309 E.g., Galvan v. Northwest Memorial Hosp., 382 Ill. App.3d 259, 265 (2008) (“Charging an
unconscionably high price, by itself, is generally insufficient to establish a claim [under the
Illinois Consumer Fraud and Deceptive Business Practice Act] for unfairness. Instead, ‘the
defendant’s conduct must [also] violate public policy, be so oppressive as to leave the consumer
with little alternative except to submit to it, and injure the consumer.’” (citation omitted)); Hatke
v. Heartland Homecare Servs, No. 90,117, 2003 WL 22283161 (Kan. App. Oct. 3, 2003) (per
curiam) (high price not actionable under Kansas Consumer Protection Act absent deceptive
bargaining conduct or unequal bargaining power).
310 ChartOne, 908 A.2d at 90-92.
311 Antoon v. Securus Tech., No. 5:15-cv-5008, 2017 WL 2124466 (W.D. Ark. May 15, 2017).

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ADTPA’s residual clause that covers “any other unconscionable, false, or
deceptive act or practice in business, commerce, or trade.” 312 Specifically, the
court found that plaintiffs had adequately pleaded an unconscionable act by
alleging that Securus was “improperly exploiting economic leverage resulting
from exclusive-provider contracts.” 313
In a still-pending New Jersey class action, the district court rejected
GTL’s attack against the plaintiffs’ allegations of unconscionable rates in
violation of the New Jersey Consumer Fraud Act (“CFA”) claims. 314 GTL
sought dismissal of the CFA claims by arguing that plaintiffs had failed to
allege any act of deception. In denying GTL’s motion, the court held that
deception was not a necessary element and plaintiffs had stated a claim of
unconscionability based on the anti-competitive way in which rates were
imposed upon a vulnerable population. 315
Most recently, the district court for Massachusetts denied Securus’s
attempt to dismiss a class action claim under Massachusetts consumer
protection law. The plaintiffs’ theory relies on a 2010 state-court opinion that
held sheriffs may only impose and collect fees that are specifically authorized
by statute. 316 The class action plaintiffs in the current case seek a declaratory
judgment that the Bristol County Sheriff has violated that ruling by collecting
fees (site commissions) that are not authorized by statute. By assisting the
sheriff in this unlawful activity, the plaintiffs argue that Securus has violated
Massachusetts’ UDAP statute. 317 The court denied Securus’s motion to
dismiss, finding that the plaintiffs were families of limited means who had no
reasonable alternative but to pay prices that Securus had inflated in order to pay
commissions to the sheriff. 318
2.

Terms and Conditions

The general terms imposed by prison retailers can be so oppressive as
to form the basis for a UDAP claim, especially to the extent that vendors
enforce the terms aggressively. Terms and conditions that are so exculpatory it
is not clear what, if anything, the vendor is promising to provide may be
actionable as unfair or unconscionable.319 So too, adhesive contracts that
312

Id. at *6 (citing Ark. Stat. § 4-88-107(a)(10)).
Id.
314 James v. Global*Tel Link, No. 13-cv-4989, 2018 WL 3736478 (D.N.J. Aug. 6, 2018 (opinion
re: cross-motions for summary judgment).
315 Id. at *7 (Unconscionability claim is “not solely about excessive rates, but also about the
manner in which those rates were established—through site commissions and ancillary fees.
From the end user’s perspective, there was no marketplace. GTL enjoyed a monopoly over
individuals held captive by a government agency.” (citation and internal quotation mark omitted;
emphasis in original)).
316 Souza v. Sheriff of Bristol County, 455 Mass. 573 (2010)
317 Complaint, Pearson v. Hodgson, No. 18-cv-11130-IT (D. Mass. May 30, 2018) (originally
filed May 2, 2018 in Suffolk Superior Court, and attached as Exhibit A to co-defendant Securus
Technologies’ notice of removal).
318 Pearson v. Hodgson, No. 18-cv-11130-IT, 2018 WL 6697682, *8-9 (D. Mass. Dec. 20, 2018).
319 See supra note 127-129 and accompanying text; Goodwin v. Hole No. 4, LLC, No. No. 2:06cv-679, 2006 WL 3327990, *8 (D. Utah Nov. 15, 2006) (contract that gave seller the “unilateral
ability to defeat the contract (and the [customers]’ justified expectations) rings of substantive
unconscionability”).
313

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contain patently unenforceable terms may run afoul of UDAP statutes.
Other problematic terms and conditions include purported waivers of
duties imposed by law. For example, JPay’s terms of service for money
transfers state that JPay “will not be liable for a Payment sent to the incorrect
inmate account.” 320 This blanket exculpatory term ignores the numerous
situations in which JPay could be liable for an erroneous transfer due to its own
negligence. 321 JPay also claims (perhaps as part of its efforts to redirect
customers to high-fee electronic payment channels) that it is “not responsible”
for money orders that it receives at its designated mailing address, but which do
not reach the intended recipient of funds. 322 This provision is on only unfair,
but is likely unenforceable as an attempt to evade the common-law duties of a
bailee. 323
Vendors’ privacy policies also contain worrisome provisions,
especially when it comes to law-enforcement use of customer data. Securus’s
Threads product collects data from numerous sources for distribution to anyone
“connected to” a public law enforcement agency or private investigative
firm. 324 Securus apparently has some awareness that such data sharing
implicates privacy laws, because participating law enforcement customers must
sign a form contract promising to “comply with all [applicable] privacy,
consumer protection, marketing, and data security laws and government
guidelines.” 325 The same contract requires agencies to agree to implement eight
specific practices, including restricting access to properly authorized
employees, using personal information only for lawful purposes, and limiting
the further dissemination of personal information. 326 Yet Securus’s customerfacing terms of service require customers to “agree that [communications data]
will be . . . assigned, sold, transferred and distributed by [law enforcement]”
and customers must further “agree that Securus assumes no responsibility for
the activities, omissions or other conduct of any member of Law

320

JPay, Inc., “Payment Terms of Service” ¶ 2, https://www.jpay.com/LegalAgreementsOut.aspx
(accessed Jan. 7, 2019).
321 Most obviously, a customer paying by credit card could have valid grounds to initiate a
chargeback if JPay negligently misdirected deposited funds. See MasterCard, Chargeback Guide
47, 222 (May 1, 2018) (description of chargeback message reason codes 4853, 53, and 79).
322 JPay, supra note 320 at ¶ 7.
323 JPay’s terms and conditions state that this disclaimer is designed for situations where “there is
a problem with the deposit.” Id. Although a money transfer is not a bailment, in the case of an
attempted payment by negotiable instrument that cannot be consummated, the recipient most
likely holds the instrument as a constructive bailee. See Bayview Loan Servicing v. CWCapital
Asset Management (In re Silver Sands R.V. Resort), 636 Fed. Appx. 950, 952 (9th Cir. 2016)
(recipient of overpayment held excess funds as constructive bailee); see also 8A Am. Jur. 2d
Bailments § 12 (2009) (“A ‘constructive bailment’ or ‘involuntary bailment’ arises where . . . a
person has lawfully acquired the possession of personal property of another and holds it under
circumstances whereby he or she should, on principles of justice, keep it safely and restore it or
deliver it to the owner.”). Although parties to a bailment may alter their respective rights and
obligations by contract, attempts to eliminate a bailee’s liability for loss arising from its own
misconduct are typically held void as against public policy. 8A Am. Jur. 2d Bailments § 86
(2009).
324 See supra, notes 152-155.
325 Master Services Agreement, supra note 119, at 5, ¶ 1.
326 Id. ¶ 2.

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Enforcement.” 327 In other words, Securus uses form contracts to require lawenforcement to observe to certain laws, while simultaneously requiring the
effected consumers to waive the protections of those same laws. Because the
agency-facing contract evidences Securus’s knowledge of applicable privacy
laws, the company’s consumer-facing terms seem particularly vulnerable to a
challenge as unfair or unconscionable.
Finally, although it would be novel, a UDAP claim could be brought in
cases where vendors have made materially different representations and
warranties to facilities versus consumers. As an example, in a typical contract
for video visitation, Securus agrees to provide functioning video service, with
specified features, and subject to detailed technical specifications. 328 Yet, the
customer-facing terms and conditions for the same service provide that Securus
does not warrant that the system will work “properly, completely, or at all.” 329
Such a stark disparity could form the basis for a claim of unfairness in that the
disparity between the vendor-facility contract and the vendor-customer contract
reflects the extent to which vendors use their disproportionate power to craft
one-sided consumer-facing contracts.
3.

Sales of Goods

Sales of goods such as food, toiletries, clothing, and electronic
hardware (including tablets) implicate both UDAP statutes and consumers’
rights under article 2 of the Uniform Commercial Code (“UCC”). The rights of
buyers regarding defective goods is likely to become more relevant to the
extent that computer tablets of questionable quality become more common. 330
Because prison retailers tend to offer the most parsimonious express warranties
imaginable, consumers will often have to rely on the implied warranty of
merchantability available under UCC article 2. 331 The implied warranty of
fitness for a particular purpose 332 may also arise in situations where a seller
encourages consumer misconceptions, such as leading customers to believe that
a tablet performs a specific function, (e.g., accessing educational content), when
in fact it does not.
Prison retailers routinely impose terms and conditions that misleadingly
purport to “disclaim” all implied warranties. 333 The enforceability of such a
provision is questionable. About one-third of the states restrict the ability of
327

Securus T&C, supra note 112, Privacy Policy §§ II(J) & (K).
E.g., Master Services Agreement, supra note 119, Exh. A §§ 29 and 33.
329 See supra note 127 and accompanying text.
330 Although not a consumer-law issue, one tablet user in South Dakota has raised ongoing
malfunctioning of computer tablets as a Sixth Amendment issue, since that state removed prison
law libraries and replaced it with a tablet-based Lexis Nexis app. See Motion for Appointment of
Counsel, Gard v. Fluke, No. 18-cv-5040-JLV (D.S.D. Jun. 19, 2018), ECF No. 3 (“The tablet
program is defective and prone to lockouts and other network and system failures. For a year,
promised repairs and updated have not provided petitioner with meaningful access to any legal
materials.”).
331 U.C.C. § 2-314.
332 U.C.C. § 2-315.
333 E.g., Union Supply Group, “Terms of Use,”
https://californiainmatepackage.com/Catalog/MenuCatalogPages/ManageStaticPage.aspx?pageid
=TermsOfUse (accessed Dec. 28, 2018) (disclaiming “any and all warranties, express or implied,
for any merchandise offered”
328

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sellers to disclaim implied warranties, and some of these restrictions may apply
to prison-retail transactions. 334 In addition, if a merchant does use a broad
disclaimer, they are required to advise consumers that they may have greater
rights under state law—a requirement that is routinely ignored by prison
retailers. 335 Even if a disclaimer of implied warranty is allowed under state
law, it may be unenforceable under the Magnuson-Moss Warranty Act, 336
which prohibits a supplier from disclaiming an implied warranty if it “makes
any written warranty to the consumer with respect to such consumer
product.” 337 Given the FTC’s broad definition of a “written warranty,” many
goods sold in a commissary will fall under this provision. 338
Although merchants are generally able to limit the duration of
warranties, prison retailers frequently use warranty periods that are so short or
otherwise oppressive that they may be actionable either under either the
Magnuson-Moss Act 339 or the UCC’s “manifestly unreasonable” standard. 340
For example, Union Supply Company sells computer tablets that are covered by
a three-month warranty. 341 The procedure for invoking one’s warranty rights
under the Union Supply policy is also troublesome. If a defective item is
returned for a warranty claim, it must be accompanied by an original receipt
and all of the original accessories and packaging. 342 This could be a consumer
trap even in a regular free-world transaction, but is particularly onerous for
someone in prison, where customers may not even be allowed to keep the
packaging. The Union Supply tablets are specifically marketed for people
incarcerated in the California prison system, which limits personal property to
items on a preapproved list (a list that does not include used packaging) and
caps the volume of allowable possessions at six cubic feet per person. 343 After
334

Nat’l Consumer Law Ctr., Consumer Warranty Law § 5.4.1 (5th ed. 2015).
16 C.F.R. § 701.3(a)(7), (8), and (9).
336 Magnuson-Moss Warranty-Federal Trade Commission Improvement Act, Pub. L. 93-637, 88
Stat. 2183, title 1 (codified as 15 U.S.C. § 2301, et seq.).
337 15 U.S.C. § 2308(a). A “supplier” is broadly defined in the Magnuson-Moss Act to mean
“any person engaged in the business of making a consumer product directly or indirectly
available to consumers.” 15 U.S.C. § 2301(4).
338 16 C.F.R. § 701.1(c)(1) (written warranty includes “[a]ny written affirmation of fact or written
promise made in connection with the sale of a consumer product by a supplier to a buyer which
relates to the nature of the material or workmanship and affirms or promises that such material or
workmanship is defect free or will meet a specified level of performance over a specified period
of time.”)
339 15 U.S.C. §§ 2308(b) (seller may limit an implied warranty only if the duration is reasonable
and the limitation itself is conscionable) and 2310(d) (private cause of action).
340 U.C.C. § 1-302(b); Nat’l Consumer Law Ctr., supra note 334 at § 7.7.4.6 (parties may vary
terms such as a warranty duration, by contract, but such variations may not be manifestly
unreasonable).
341 See supra note 136 and accompanying text. The warranty period is technically 180 days, but
after 60 days, a repair fee is imposed that may prevent many customers from effectively making
warranty claims. Notably, although the company’s website terms include a description of the
warranty coverage, it also states that complete warranty terms are available only in the tablet
package, a practice that likely violates of the Magnuson-Moss Act. 15 U.S.C. § 2302(b)(1)(A)
(requiring warranty terms to be “made available to the consumer (or prospective consumer) prior
to the sale of the product to him.”).
342 Union Supply Group, supra note 136.
343 Cal. Code Regs. tit. 15, § 3190(e); Calif. Dept. of Corr. and Rehabilitation, “Inmate Property
Matrix” (rev. Apr. 1, 2014),
335

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imposing intricate and burdensome rules for warranty claims, Union Supply
claims to reserve to itself the sole discretion to determine whether a returned
item is eligible for warranty service. If it determines a return is ineligible, the
company has the sole discretion to decide whether or not to return the item to
its owner. 344
The use of oppressive warranty terms is not unique to Union Supply.
The warranty for GTL’s tablets lasts twelve months, but repairs can take up to
one month to complete (or “21 working days”), and GTL has the sole discretion
to determine whether “conditions of the warranty are met.” 345 If GTL
determines the product is not eligible, the customer has no appeal rights, does
not receive the original device back, and his only recourse is “to purchase a new
tablet.” 346
Tactics that render warranty coverage illusory can be actionable as
either a deceptive or an unfair practice.347 In addition, the Magnuson-Moss Act
allows the FTC or the Attorney General to sue when “the terms and conditions
of [a written warranty] so limit its scope and application as to deceive a
reasonable individual;” 348 there is not, however, a private cause of action under
this provision.
D.

Antitrust

Because prison retailers are able to use their market power to inflict
harm on consumers, many industry trade practices are potentially subject to a
private action under section 4 of the Clayton Act. 349 Specific aspects of prisonretailing that are relevant to such claims include vendor exercise of monopoly
power, the oligopoly in the correctional telecommunications market, and
collusion between vendors and facilities in setting prices. Due to the
specialized nature of antitrust litigation, this paper does not explore such
actions in greater depth; however, recent developments in public enforcement
do warrant a brief mention.
ICS carrier Inmate Calling Solutions, LLC (doing business as
ICSolutions) is a wholly owned subsidiary of commissary company Access
Corrections. ICSolutions claims to provide communications service at over
400 facilities, with a captive customer base of approximately 268,000

https://www.cdcr.ca.gov/Regulations/Adult_Operations/docs/DOM/DOM%202018/APPS-Rev4-1-14.pdf.
344 Union Supply Group, supra note 136.
345 Pennsylvania-GTL Contract, supra note 43, appx. G at Requirement #103. Even though the
tablets are warranted for twelve months, the batteries (which are presumably a critical
component) are only warranted to last three months. Id. at p. 415 (GTL Genesis 116-PA spec
sheet).
346 Id. appx. G at Requirement #103.
347 See Roelle v. Orkin Exterminating Co., No. 00AP-14, 2000 WL 1664865, *6-7 (Ohio Ct. App.
Nov. 7, 2000) (guarantee that promises effective services but is negated by other components of
the same contract is a deceptive practice under the Ohio Consumer Sales Practices Act).
348 15 U.S.C. § 2310(c).
349 15 U.S.C. § 15.

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incarcerated people. 350 Based on publicly available data, it appears that
ICSolutions is the third largest ICS carrier in the market. 351 In June 2018,
Securus filed an application under § 214 of the Communications Act, seeking
FCC permission to acquire ICSolutions. 352 The acquisition has been challenged
by the Wright petitioners and others, and recent filings indicate concern about
market consolidation on the part of the FCC and the Department of Justice. On
September 26, 2018, the FCC announced that it was waiving its informal, selfimposed 180-day merger review timeline because Securus had not satisfied the
Commission’s requests for information, documents, and data. 353 In an October
16, 2018 filing, 354 Securus’s counsel revealed that the proposed acquisition is
also subject to a “second request” from the Department of Justice’s Antitrust
Division, pursuant to the Hart-Scott-Rodino Act. 355
While the internal deliberations of the FCC and the Justice Department
are not known at this time, the agencies’ decision to seriously question the
effect of the transaction suggest concern over the acute consolidation within the
ICS marketplace. When the deal was announced, Moody’s Investors Service
noted that the acquisition was “costly” for Securus, but it would “eliminate[] an
aggressive competitor in the smaller facility space comprised of local and
county jails.” For this reason, Moody’s reaffirmed Securus’s bond rating,
citing the company’s “small scale, niche industry focus, aggressive financial
policy, and strong competitive pressures in a largely duopolistic and mature
end market.” 356
The regulatory inquiries regarding the ICSolutions acquisition are an
indication that regulators are waking up to the lack of competition in the ICS
industry. Yet even if the government were to block the ICSolutions acquisition,
it may not be realistic to expect a resurgence of competition in a market that has
become consistently less robust over the span of several decades.

350

ICSolutions, Response to Request for Proposals for Providing Inmate Communication
Services for the Harrison County Jail Facilities, Gulfport, Mississippi, at 1 (Jul. 28, 2017) (on file
with author).
351 Wagner, supra note 51, lists ICSolutions’ market share as fourth, behind CenturyLink. But
CenturyLink is likely not a true independent competitor in the ICS marketplace. CenturyLink, an
incumbent local exchange carrier with operations concentrated in western and midwestern states,
is a nominal holder of many ICS contracts, but its bid proposals indicate that CenturyLink simply
provides transmission lines, while ICS carriers such as Securus or GTL are responsible for all
operational details, such as software, billing functions, and customer support. See e.g.,
CenturyLink, Response to Georgia Dept. of Corrections Solicitation No. 46700-GDC0000669,
attch. K (Jun. 9, 2015) (on file with author).
352 Joint Application, In the Matter of Joint Application of TKC Holdings, ICSolutions, and
Securus Technologies for Grant of Authority, WC Dkt. No. 18-193 (Jun. 12, 2018).
353 Letter from Kris Anne Monteith, Chief of Wireline Competition Bureau to counsel for joint
petitioners, In the Matter of Joint Application of TKC Holdings, ICSolutions, and Securus
Technologies for Grant of Authority, WC Dkt. No. 18-193 (Sept. 26, 2018).
354 Letter from Paul C. Besozzi, counsel for Securus, In the Matter of Joint Application of TKC
Holdings, ICSolutions, and Securus Technologies for Grant of Authority, WC Dkt. No. 18-193
(Oct. 16, 2018).
355 See 15 U.S.C. § 18a(e).
356 “Moody’s says Securus’ ratings unchanged following add-on to term loan,”
https://www.moodys.com/research/Moodys-says-Securus-ratings-unchanged-following-add-onto-term--PR_383221 (May 7, 2018) (emphasis added).

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Policy Recommendations

Although prison-retail customers have some protections, as discussed
in the previous section, these scattered ex post remedies are inefficient and lessthan-comprehensive. True protection must come through a deliberately
designed system of ex ante regulation that respects legitimate security needs
while vigorously protecting the interests of incarcerated people as consumers.
Central to the current lack of consumer protections is the failure of any
government agency to take responsibility for broadly protecting the rights of
incarcerated people and their families as captive customers. Time and time
again, concerns about abusive monopolist business practices are dismissed by
policymakers who claim that correctional agencies take these matters into
account when awarding exclusive vendor contracts. This is not a sufficient
answer, given the agencies’ divided loyalties.
This section explores proactive actions that legislatures, regulatory
agencies, and correctional facilities can take. Because the majority of
incarcerated people are held in state or local facilities, this section begins with
state-level policy proposals and then considers potential federal action.
A. State and Local Governments
The basic problem of prison retailing can be summarized as follows:
growing prison populations have led to unsustainable correctional budgets,
which has led agencies to seek out so-called “no cost” contracts (which, in
reality, simply means shifting costs from the public sector to incarcerated
people). The ultimate solution to this quandary is for states to reduce the use of
incarceration and acknowledge that the state must assume the financial costs
when it chooses to incarcerate people. In the absence of this big-picture
normative change, consumer rights can be protected through reforms that are
more incremental, but which nonetheless creatively change the ways in which
society addresses the burdens of incarceration.
1. Reimagine Procurement Practices
Opening up aspects of the procurement process to oversight is one part
of a multi-layered approach to addressing the problematic aspects of prison
retailing. 357 This can be accomplished through numerous changes, ranging
from major overhauls to minor tweaks. To begin, families and representatives
of incarcerated people must have a meaningful role in the procurement process.
Incarcerated people and their families are increasingly well organized, and as
the experience of the Wright petitioners teaches, advocacy groups are entirely
qualified to participate in complex regulatory matters, and they contribute
substantial value to policy debates when their voices are heard. Accordingly,
any panel of reviewers that evaluates bids for prison-retail contracts should
include a qualified delegate from an organization that represents the interests of

357

See Confronting Confinement, supra note 82, at 78 (The key, many people told the
Commission [on Safety and Abuse in America’s Prisons], is never to rely on any single
mechanism of oversight and accountability, but rather to take what Professor Michele Deitch
calls a ‘layered approach.’”).

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people incarcerated by the agency that has solicited bids. Such delegate must
have access to all aspects of the bid file, including confidential financial
information. Members of bid-review committees routinely preserve the
confidence of sensitive data, and this will remain true if consumer advocates are
included in the process. Indeed, allowing advocates to sit on review
committees is no more revolutionary than the numerous insurance regulatory
systems that allow intervention of consumer advocates in ratemaking
proceedings. 358
Corrections agencies should also require that money transmitters
protect consumer funds from loss in the event of insolvency. Although money
transmitter regulations do help to mitigate that risk to some extent, those
regulations do not cover prepaid funds for communications services or
commissary items. Insolvency could easily result from a hacking attack on a
prison retailer, something that is not inconceivable given that incarcerated
customers were able to hack a JPay account system in the summer of 2018.359
Given the risks posed to consumers, express protections in the event of vendor
insolvency should be built into any contract for money transfers, as well as the
related customer-facing terms and conditions. 360 Such protections could
include segregating prepaid revenue or requiring a surety bond or other
security.
There are also numerous more targeted reforms that correctional
agencies could achieve simply by modifying the terms of requests for
proposals. For example, agencies could:
• Refuse to consider or enter into bundled contracts.
• Allow all incarcerated customers to designate a third party
representative (i.e., a trusted non-incarcerated friend or family
member) for purposes of accessing account data and interacting
with vendor customer-service staff. 361
• Require all vendors providing financial services to formulate a data
protection plan and comply with the consumer data provisions of
the GLBA.
• Prohibit vendors from disclaiming the implied warranties of
merchantability and fitness for a particular purpose.
358

See Daniel Schwarcz, “Preventing Capture through Consumer Empowerment Programs; Some
Evidence from Insurance Regulation,” in Preventing Regulatory Capture: Special Interest
Influence and How to Limit It 365 (Daniel Carpenter & David A. Moss, eds., 2014).
359 Steve Horn, “JPay Vulnerability Exploited by Idaho Prisoners for $225,000 in Credits,”
Prison Legal News v. 29, n. 9 (Sept. 2018), at 16 (reporting that residents of an Idaho prison
exploited a “software vulnerability” and generated $225,000 in prepaid account value; the hack
involved prepaid account balances, not funds in trust accounts); see also supra, note 156 and
accompanying text (discussing a non-payment related hack of Securus calling records).
360 See Levitin supra note 249, at 7 (“Something as pedestrian as a hacking can bring down a
payment fintech very rapidly, and without adequate insurance requirements for such fintechs,
consumers stand to lose their funds.”).
361 At least part of this third-party authorization system can be modeled after the CFPB’s
“Consumer Protection Principles: Consumer-Authorized Financial Data Sharing and
Aggregation” (Oct. 18, 2017), http://files.consumerfinance.gov/f/documents/cfpb_consumerprotection-principles_data-aggregation.pdf (“Consumers are generally able to authorize trusted
third parties to obtain [account-related] information from account providers to use on behalf of
consumers, for consumer benefit, and in a safe manner.”).

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Require public posting (accessible both in- and outside of prison)
of all vendor policies and fees, as well as disclosure of any
compensation received by the correctional agency.
Prohibit forfeiture of prepayments and require that all unused
prepayments be refunded upon a customer’s release from custody.
If any refund cannot be completed, the credit balance should be
administered under the state’s unclaimed property law.
2. Foster Competition

Part of the reason why retail offerings like commissary and telephone
service are delivered through monopoly contracts is that correctional facilities
want tight control over the security practices of vendors. This is
understandable in the case of tangible goods—it’s easy to understand how a
box of cereal purchased from the commissary could potentially be used to
smuggle contraband. Contrast these legitimate security concerns to the case of
digital content delivered via tablets. Companies like Apple and Spotify have
spent considerable resources amassing enormous catalogs of music, and
developing sophisticated content-delivery platforms. Moreover, these
companies have invested substantial money (almost assuredly more than has
been invested by prison-retail firms) in designing a secure network that can
prevent malicious misuse.
Any computer network used by incarcerated people must be established
by the facility, subject to necessary security features. The costs of establishing
that network can be funded through correctional budgets or (if necessary)
through reasonable user fees. But providing software and content that operates
on this closed network need not be the exclusive province of a monopoly
provider. Free-world platforms can be modified and offered in prisons,
allowing customers to select providers in a truly competitive market. There are
two reasonable security concerns about allowing such free-world digital
platforms in a correctional facility: (1) potentially objectionable content in
books, music, or other digital material, 362 and (2) certain features like user
reviews, which could be used to facilitate unauthorized communications.
Correctional administrators who are truly committed to innovation could work
with technical experts on modifying existing platforms to address these
concerns. For example, if facilities want to control the types of songs available
(due to violent or sexual content), then how could various corrections
departments collaboratively curate and share a database of acceptable songs,
while simultaneously providing users explanations of why certain music has
been censored? Or if prison administrators balk at iTunes because user reviews
allow communication with the outside world, could the software be modified to
disable to the review feature for incarcerated users?
362

Even though it is generally obvious that prisons should have the power to screen out
objectionable content, prison officials have repeatedly proven themselves unreasonably
overzealous in exercising this power. Perhaps the most notorious example are the numerous
books which have been prohibited in prisons for implausible, nonsensical, or obviously pretextual
grounds. See Books to Prisoners, “Banned Books List,”
http://www.bookstoprisoners.net/banned-book-lists/ (accessed Jan. 6, 2019) (collecting
examples). This is a real problem, but one that is simply beyond the scope of this paper.

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Competition is also possible in the communications sector, and has
been the subject of advocacy campaigns in the past. A specialized prison
platform that coordinates necessary security features, but lets users select a
carrier of their choice, is worth exploring. The feasibility of such a competitive
framework, however, depends on the proportion of ICS carrier costs that are
actually attributable to provisioning and transmitting communications. To the
extent that such costs are substantial, then competition could provide benefits
for customers. On the other hand, if the majority of carrier costs are
attributable to security features (which resembles a natural monopoly), then
competition would likely have little effect on end-user rates.
3. Conduct Rulemaking Proceedings to Protect Consumers
Absent Congressional action, some subset of telecommunications
services will remain under the supervision of state public utilities commissions
(“PUCs”). So long as this regulatory dichotomy continues, it is critical for
PUCs to ensure reasonable ICS rates. Intrastate rate regulation is particularly
important for people incarcerated in local jails, because they are presumably
more likely to make local calls (to family or counsel in the vicinity who can
provide immediate help) and do not have the ability to use VoIP routing to
obtain the most favorable rates. 363 When setting rates, PUCs must take care to
prevent carrier manipulation of cost data by obtaining comprehensive corporate
financial information.
UDAP statutes are another critical protection, which can extend to all
types of prison retailing, not just telecommunications. Because these statutes
prohibit very broad categories of behavior, many states allow attorneys general
or consumer-protection agencies to promulgate rules defining certain unfair or
deceptive practices in greater detail. 364 UDAP regulations could provide
greater clarity by addressing issues specific to prison retailing. The first issue
to address is arbitration provisions. Because prison-retail consumers have no
ability to choose sellers, their consent to an arbitration clause is not truly
voluntary. To mitigate this situation, states should issue regulations making it
an unfair trade practice for any prison retailer doing business in that state to
impose mandatory arbitration or prohibit class adjudication. States should also
conduct other UDAP rulemakings after surveying incarcerated people and their
families and identifying the problems most in need of remediation.
4. Provide Protection for Trust Account Balances
As discussed previously, families will sometimes utilize prepayment
options with unfair terms in an effort to avoid depositing funds into a trust
account where they can be subject to mandatory deductions. Some such
deductions can take the form of irregular seizures, such as a writ of
garnishment. Other jurisdictions have made mandatory deductions more
systematic. For example, a 2017 Oregon law directs the Department of
Corrections to deduct 15% of all incoming funds (including wages or gifts), to

363
364

See supra notes 200-201 and accompanying text.
Nat’l Consumer Law Ctr, supra note 139 at § 3.4.4.2.

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pay any outstanding compensatory finds, restitution, court-appointed attorney
fees, child support, or civil judgments. 365 To illustrate the impacts of this law,
consider a hypothetical mother who wishes to support her son in the Oregon
prison system. If, every month, the mother wants her son to have enough
money to purchase five prepaid mailing envelopes, a months’ supply of dental
floss, deodorant, a bar of soap, and enough to pay for two 20-minute phone
calls, she would need to send $17.65 per month. 366 The impact of the new law
is that she now needs to send $20.30 per month for her son to have the same
buying power. The increased monthly deposit also increases the applicable
transaction fee (charged by Access Corrections) by $3 per month (or $4 in the
case of a phone payment). 367 Between increased transfer amounts and
applicable fees, the total impact on the mother would be $67-79 per year.
Defenders of such mandatory deductions are quick to emphasize the
importance of paying court-ordered financial obligations. But these arguments
miss the fact that all states have enacted statutory exemptions for judgment
debtors based on the realization that everyone needs minimal financial
resources to live. In particular, most jurisdictions exempt a subsistence-level
amount of wages from garnishment.
One simple way that states could protect incarcerated people and their
families from predatory prepayment schemes would be to exempt a reasonable
amount of monthly trust account deposits from seizure under mandatory
deduction laws. Despite the predictable counter-arguments that would come
from proponents of zero-sum criminal justice, such a policy need not diminish
the importance of repaying court-ordered debts. Rather, just like a wagegarnishment exemption, it is an acknowledgment that people in prison are
expected to pay for basic necessities, and to do so, they must have some degree
of protection from involuntary payments.
5. Develop Independent ADR Systems
Another important issue that should be seriously addressed in prisonretail systems is the existence and structure of customer dispute resolution
processes. It is an admitted challenge to design an effective dispute resolution
process in a business where most transactions are for small dollar amounts.
This is where the experience of e-commerce can prove illuminating, as large
companies have developed extensive internal dispute resolution systems that
resolve matters quickly and efficiently. 368 These systems are not without
problems, and they would have to be modified to work in prison. Yet they
represent a potential model of how to resolve consumer complaints in an
inexpensive and potentially fair manner. A creative form of alternative dispute
resolution (“ADR”) in prison retailing is sorely needed. Vendors do not
operate in a competitive market and therefore have little incentive to seriously
365

Or. Rev. Stat. § 423.105.
The cost of the phone call and postage are based on current rates; all other items are based on
a likely outdated 2014 commissary price list available at
https://www.oregon.gov/doc/docs/pdf/Commissary%20List.pdf.
367 Access Corrections, Rate Sheet, https://www.oregon.gov/doc/docs/Access_Corrections.pdf
(accessed Jan. 12, 2019).
368 Rory Van Loo, The Corporation as Courthouse, 33 Yale J. Regulation 547, 571-578 (2016).
366

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respond to consumer complaints. Meanwhile, disputes in prisons are typically
funneled to grievance systems which are notoriously biased, unfair, and
ineffective. 369
Often the problems with internal grievance systems can be traced to
staff skepticism regarding the validity of complaints coming from incarcerated
people. In some ways, this is the correctional system’s version of Liebeck v.
McDonald’s Restaurants (the “McDonald’s hot coffee case”), a highly
publicized case that has led to many strongly-held opinions based on
misinformation. 370 The equivalent case in the correctional sector was a real
lawsuit (many details of which have been lost to the sands of time) involving a
purchase of peanut butter from a prison commissary. Senator Bob Dole
described it as a suit over “being served chunky peanut butter instead of the
creamy variety” during Senate debate of the Prison Litigation Reform Act. 371
The case became a widely-cited example of frivolous prison litigation, and has
become a shorthand method of dismissing the complaints of incarcerated
people. Yet when Chief Circuit Judge Jon O. Newman unearthed the original
complaint from the case, he discovered that Senator Dole’s characterization was
not entirely accurate: yes, the plaintiff had received the incorrect type of peanut
butter, but he filed the suit because he returned the incorrect jar and never
received the refund he was promised. 372 As Judge Newman remarked, the
$2.50 cost of the peanut butter may seem trivial to some, “but out of a
prisoner’s commissary account, it is not a trivial loss, and it was for loss of
those funds that the prisoner sued.” 373
The mythology of the peanut butter case is representative of many
correctional administrators’ hostility toward grievances. Accordingly, the best
way to ensure an effective and innovative ADR mechanism for prison retail
transactions is to remove it from the correctional system entirely. To
accomplish this, legislatures should consider creative ways of requiring prison
retailers to utilize outside ADR mechanisms. The details of such systems will
vary, but should be commensurate with the needs of any given prison-retail
operation. The most critical component is an independent evaluator such as an
ombudsperson who works outside of the correctional agency, 374 or a contractor
who is tasked with adjudicating disputes. Ideally, this can be funded from the
labor cost-savings that prison-retailers regularly claim as a benefit of their
products. Alternatively, in jurisdictions that continue to impose site
369 See e.g., Prison Justice League, A “Rigged System”: How the Texas Grievance System Fails
Prisoners and the Public at 5 (Jun. 2017) (54% of survey respondents reported never having a
grievance satisfactorily resolved during their time in Texas prison, 91% reported that the system
was not effective); Confronting Confinement, supra note 82 at 93 (“Nearly every prison and most
jails have a procedure for receiving prisoners’ grievances. However, the Commission heard that
many are ineffective.”).
370 See FindLaw.com, “The McDonald’s Hot Coffee Case,” https://injury.findlaw.com/productliability/the-mcdonald-s-coffee-cup-case-separating-mcfacts-from-mcfiction.html (accessed Jan.
10, 2019).
371 152 Cong. Rec. S14413 (daily ed. Sep. 27, 1995) (statement of Sen. Dole).
372 Jon O. Newman, “Not All Prisoner Lawsuits Are Frivolous,” Prison Legal News, v. 7, n.4
(Apr. 1996), at 6.
373 Id.
374 Arthur L. Alarcón, A Prescription for California’s Ailing Inmate Treatment System: An
Independent Corrections Ombudsman, 58 Hastings L.J. 591 (2006).

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commissions, a portion of commission revenue could be used to defray the
costs. A new ADR system could utilize technology to obtain necessary
information from the consumer, analyze vendor data to identify problematic
products or practices, and provide performance data to the correctional agency
for use when deciding whether to renew a contract. Such novel solutions will
likely require legislative action, because they will be effective only to the extent
the ADR neutral has access to transactional details and vendor records—
something that vendors will not likely acquiesce to unless required by law.
B. Federal
1. CFPB Regulation of Correctional Banking
Under title X of the Dodd-Frank Act, 375 the CFPB is authorized to
prohibit unfair, deceptive, and abusive practices (“UDAAP”). The CFPB
should use these powers to comprehensively regulate the entire field of
correctional banking. Title X grants the CFPB the authority to prohibit
UDAAP by “covered persons,” which are defined as persons or entities
“engage[d] in offering or providing a consumer financial product or service.” 376
Correctional banking vendors transmit funds, provide payment services, accept
deposits for the purpose of facilitating transfers, and act as custodians of stored
value, all of which are statutorily defined as consumer financial products or
services for purposes of title X. 377
The UDAAP provision in § 1031 of the Dodd-Frank Act includes
statutory definitions of the terms “unfair” and “abusive.” Unfair practices are
defined using the same definition as the FTC Act, requiring a likelihood of
substantial injury, unavoidable by the consumer, which is not outweighed by
countervailing benefits. 378 Trust fund transfers, prepayment products, and
release cards routinely injure consumers by imposing supra-competitive fees
and unfair terms and conditions. The customers in these transactions receive no
corresponding benefit as a result of these practices, nor do consumers have
access to a competitive market.
Section 1031 contains several definitions of abusive practices, one of
which is an act or practice that “takes unreasonable advantage of . . . the
inability of the consumer to protect the interests of the consumer in selecting or
using a consumer financial product or service.” 379 Again, correctional banking
products easily fit this definition because of the complete lack of consumer
choice and the exploitative fees that are levied on vulnerable consumers.

375

Dodd–Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124
Stat. 1376 (2010).
376 12 U.S.C. § 5481(6)(A).
377 Id. §§ 5481(5), (8)(C), and (15)(A)(iv), (v) & (vii).
378 Id. § 5531(c)(1) (defining unfairness as an act or practice that is “likely to cause substantial
injury to consumers which is not reasonably avoidable by consumers,” and such injury is not
“outweighed by countervailing benefits to consumers or to competition”).
379 Id. § 5531(d)(2)(B); see also Adam Levitin, “CFPB ‘Abusive’ Rulemaking?” Credit Slips
Blog (Oct. 17, 2018), https://www.creditslips.org/creditslips/2018/10/cfpb-abusiverulemaking.html (arguing that the abusive prong under the CFPB’s enabling statute is basically
duplicative of unfairness and deception).

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Using its § 1031 powers, the CFPB should conduct an open-ended
rulemaking to address common practices in the correctional banking industry.
Such a rulemaking should include fee regulation and extension of Regulation
E’s compulsory-use prohibition to release cards. The Bureau should also
directly regulate correctional banking fees. While this level of intervention
would be somewhat unusual, even those who lean toward market discipline of
fees acknowledge that context matters. 380 In the case of correctional banking,
the facility is the party that evaluates bids and awards exclusive contracts.
Transaction costs should therefore be internalized and borne by the facility,
which is in the best position to minimize such costs.
2. Congressional Action
The most important step that Congress can take is to clarify FCC
jurisdiction over emerging technology. This issue is already on the legislative
radar screen. In 2017, Senator Tammy Duckworth introduced legislation to
clarify the FCC’s jurisdiction over ICS telephone service and video visitation,
regardless of whether such communications are inter- or intrastate. 381 The bill
was assigned to committee and languished without any further action. Due to
technological changes in telecommunications, the traditional dichotomy
between intra- and interstate communications makes little sense. The
Duckworth bill should be reintroduced in the current congress and advocacy
organizations should make passage a priority.
3. Wright Petition, Post-Remand
After the FCC took up the matter of ICS rate regulation, the
Commissioners fractured on the appropriate regulatory fix. But even Chairman
Pai, who led the dissent, admitted that government intervention in the ICS
market is appropriate given the documented market failure. 382 Now that the
D.C. Circuit has vacated portions of the FCC’s 2015 rule, the ball is once again
in the FCC’s court. Recall, however, that title II’s requirement of just and
reasonable rates can be enforced via private litigation. The matter ended up
before the FCC because courts were receptive to ICS carriers’ citation to the
primary jurisdiction doctrine. That rule is a prudential doctrine, which some
courts have declined to apply in situations where “the agency is aware of but
has expressed no interest in the subject matter of the litigation.”383 If the FCC
does not promptly take up the Wright rulemaking now that it has been
remanded, then courts should interpret this as a lack of agency interest, and
decline to invoke the primary jurisdiction doctrine in future cases.
As for the substance of the rulemaking, the FCC should promulgate
new price caps for interstate ICS rates using a methodology that will satisfy
judicial review. The Commission should also reissue the same restrictions on
ancillary fees that were contained in the 2015 rules, but this time specifically
380 Liran Haim & Ronald Mann, Putting Stored-Value Cards in Their Place, 18 Lewis & Clark L.
Rev. 989, 1016 (2014) (“In our view, the question of fee regulation [for prepaid cards] should be
largely contextual.”).
381 Video Visitation and Inmate Calling in Prisons Act of 2017, S. 1614, 115th Cong. (2017).
382 See supra note 213.
383 Astiana v. Hain Celestial Group, 783 F.3d 753, 761 (9th Cir. 2015).

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invoke § 152(b)’s “impossibility exception” as grounds to apply the rules to
intrastate calling. 384
The Commission must also address ICS carriers that invoke their use of
VoIP technology to evade state regulation. When vacating the FCC’s caps on
intrastate rates, the D.C. Circuit relied on § 152 of the Communications Act,
which creates a presumption that states will regulate intrastate
communications. 385 The purpose of § 152 is to respect the dual sovereignty of
federal and state regulators. To the extent that the industry is successful in
evading state regulation, then § 152 is no longer in play. The FCC has been
willing to use It should certainly exercise its power over the same technology
when failure to do so would result in a complete regulatory vacuum.
The Commission should also regulate emerging technologies such as
video visitation and electronic messaging. This may seem infeasible given the
current political makeup of the FCC, but it should not be. The Commission can
maintain a general agenda of deregulation and still recognize the sui generis
market failure that has occurred in prison telecommunications. The novelty of
the products should not obscure the fact that customers are purchasing “mere
transmission” of text, voice, or video messages, the hallmark of
communications services subject to regulation under title II. 386 Those services
suffer from the same market failures that the FCC identified in connection with
telephone service in correctional facilities, and basic rate caps restrictions on
abusive fees would benefit consumers.
VI.

Conclusion

Prison retailing is a predictable result of an age of runaway carceral
growth coupled with legislative demands for fiscal austerity. While common
business practices in the industry regularly run afoul of existing laws,
substantial roadblocks make it difficult for injured customers to exercise what
rights they may have. Meanwhile, correctional administrators, who are in the
best position to guard against industry abuses, have largely indicated a lack of
interest in consumer protection.
As discussed in the previous section, legislative and administrative
bodies have numerous tools at their disposal to address the problems of prison
retailing. A world without the parasitic companies that dominate the industry is
achievable, but given the profitability of current business practices, pushback
will be intense as companies defend their ability to extract profits from captive
customers. Accomplishing meaningful change will thus require concerted
effort by advocates and a willingness on the part of policymakers to see
incarcerated people and their families as consumers entitled to the same
protections that are enjoyed by most people every day.
384 See e.g., Minn Pub. Utils Comm’n v. Fed. Comm’cns Comm’n, 483 F.3d 570, 577 (8th Cir.
2007) (impossibility exception “allows the FCC to preempt state regulation of a service which
would otherwise be subject to dual federal and state regulation where it is impossible or
impractical to separate the service's intrastate and interstate components”); see also supra note
192.
385 Global Tel*Link v. Fed. Commc’ns Comm’n, 866 F.3d 397, 409 (D.C. Cir. 2017) (“§ 152(b)
of the 1934 Act erects a presumption against the Commission’s assertion of regulatory authority
over intrastate communications.”).
386 See Restoring Internet Freedom, supra note 206, at ¶ 6, 33 FCC Rcd. at 313 (describing
information services as those that “offer more than mere transmission”).